Hong Kong Lawyer - Olga Boltenkohttp://hk-lawyer.org/authors/olga-boltenko
Fangda Partners, Hong Kong
Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both ad hoc and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.
enCoup d’état and failed States: investment in crisishttp://hk-lawyer.org/content/coup-d%E2%80%99%C3%A9tat-and-failed-states-investment-crisis
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/contents/exclusively-online" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Exclusively Online</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Coup d’état and failed States: investment in crisis</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p><em>“I don’t like this kind of life where every month you are faced with some kind of a coup”<br />
-<em>Jejomar Binay (former mayor of Makati)</em></em></p>
<p> </p>
<p>In the early hours on Thursday, 11 April 2019, one imagines the soldiers of the Sudanese Armed Forces storming the lodgings of Omar al-Bashir in Khartoum, where he was being held under house arrest, and detaining him under the authority of the emerging transitional government. Later the same day, Omar al-Bashir was overthrown as Sudan’s President, ending his 30 year-long rule over one of Africa’s largest countries, and marking the commencement of a transitional period in Sudan.</p>
<p>Given the political instability in Sudan over many years, very few established investors would view Sudan as the desired investment destination. China, however, remains Sudan’s largest trade partner, with the majority of trade arrangements having been negotiated with the deposed Al-Bashir’s government. The diplomatic recognition of the post-coup government would inform how such arrangements would run their course.</p>
<p>In the past five to seven years, the world has seen powerful autocratic regimes succumb to military or otherwise non-constitutional takeovers. The Arab Spring of 2011 alone resulted in the collapse of the authoritarian regimes in Libya, Tunisia, Egypt, and Yemen. In other parts of the world, new States have emerged as a result of secession and decolonization. Once colonized territories have gone through dramatic political changes on the way to self-determination.</p>
<p>As a result of these political changes, State contracts entered into between foreign investors and host governments are revisited, prior governments’ obligations are dishonoured, large investment projects are terminated or renegotiated, the assets of sovereign wealth funds remain suspended in foreign bank accounts until the new governments are recognized as legitimate successors of the deposed regimes.</p>
<p>These dramatic developments pose questions of diplomatic recognition and State succession not only for researchers and sensation-hungry journalists, but also for the banks who hold sovereign funds of the deposed governments, for the investors who have ongoing contractual relationships with the outgoing governments, or who are building new relationships with the new governments, and for other stakeholders in the global investment community. The answers to such questions, which are rarely accessible in the public domain, directly affect the livelihoods of those who depend on the economic and political stability of their communities for survival.</p>
<p>In the Belt &amp; Road context, the State succession rules have assumed a timely importance, in particular in South East Asia, Central Asia, and in Africa, where the levels of political volatility have been historically high.</p>
<p><strong>SUCCESSION TO OBLIGATIONS UNDER STATE CONTRACTS</strong></p>
<p>In 2015, long before his dramatic demise, Al-Bashir travelled to China to sign a number of large infrastructure contracts with Chinese State-owned Enterprises. One imagines Al-Bashir travelling in luxury from impoverished Khartoum to prosperous Beijing, to sign arrangements that would provide infrastructure development for projects involving a 1,000 km long railway in eastern Sudan, as well as the development of a military-industrial complex on the outskirts of Khartoum, among other deals.</p>
<p>State succession rules and diplomatic recognition of governments inform what happens with the State’s obligations under State contracts and other agreements concluded between foreign investors and host States, when the government changes or when a new State emerges. The Vienna Convention on Succession of States in Respect of State Property, Archives, and Debts, deals with debt-related issues, but it does not regulate individuals’ relationship with the changing nature of the State.</p>
<p>A successor State’s sovereignty is derived from international law, and not from the predecessor State. O’Connell wrote that “<em>the successor State is entitled to exercise the predecessor’s rights and is obliged to discharge the predecessor duties, because international law so directs.</em>” (O’Connell, State Succession, 1967 (n 15), 32-3). In other words, the legal order of the predecessor State does not simply disappear with the emergence of the successor State. Instead, in the name of coherence of the international legal order, in most circumstances, the successor State is to assume the obligations taken on by the predecessor State.</p>
<p>O’Connell further finds, with respect to State contacts and other arrangements with foreign investors, that “<em>rights acquired under the predecessor State survive [a] change of sovereignty because the law that created them survives.</em>” (O’Connell, Recent Problem of State Succession (n 41), 139).</p>
<p>The rights and obligations so acquired by the successor State must be complied with until they are modified by the successor State. Such modification must happen within the ambit of the applicable law, failing which the conduct of the successor State may be sanctioned (See, A Guide to State Succession in International Investment Law, Patrick Dumberry, p 280, 10-10).</p>
<p><strong>STATE SUCCESSION: THE BASICS </strong><strong> </strong></p>
<p>The public international law rules on State succession regulate the continuity of legal obligations of States following political changes in the structure of statehood, where one State effectively replaces another State in the responsibility for the international relations of the territory.</p>
<p>Scholars recognize six types of succession scenarios:</p>
<ol style="list-style-type:lower-alpha;"><li>Unification, where the extinction of a predecessor State results in the creation of another State (the case of the unification of Zanzibar and Tanganyika into modern-day Tanzania in 1964);</li>
<li>Dissolution, where the extinction of a predecessor state creates multiple independent States (the dissolution of the USSR in 1991);</li>
<li>Incorporation, where the extinction of a predecessor State does not create a new State but rather enlarges the territory of the successor State (the case of the German Democratic Republic and the Federal Republic of Germany, former East and West Germany, in 1990);</li>
<li>Secession, where a new State emerges as a result of breaking up from the existing State, leaving the existing State alive despite the loss of a part of its territory (South Sudan in 2011);</li>
<li>Newly independent states that emerge as a result of decolonization, with the difference from secession being that the territories should not be considered as a part of the colonial powers (India and Pakistan in 1947);</li>
<li>Cession or transfer of territory, where a part of the territory under the control of one State reverts to the sovereign rule of another State (Macao and Hong Kong).</li>
</ol><p>The degree of continuity of States depends on the type of succession scenario. For example, in the case of dissolution, Russia assumed many of the USSR’s international law obligations. The dissolution-based continuity would be different, however, for the other former USSR republics.</p>
<p>State succession rules, in addition to being of crucial importance for the community of States, also play an important role in investment disputes.</p>
<p>Investment law concerns raised by foreign investors and the accompanying disputes have proven to be more immediate than the rules of public international law. They form investment-related considerations through an ever-growing body of case law.</p>
<p>The first tribunal to deal with the cession question with respect to a bilateral investment treaty was a tribunal constituted under the China-Laos bilateral investment treaty to resolve a dispute between a Macanese investor and the Lao PDR (<em>Sanum v Laos</em>). The question at the heart of the dispute was whether China’s treaty with Laos extended to Macao following the cession of the territory from Portugal to China in 1999. Whether the China-Laos treaty extended to Macao would inform whether a Macanese investor could bring a claim against Laos under the treaty. Ultimately, the question had to be entertained by the Singapore Court of Appeal when the tribunal’s award was challenged before the courts at the seat of the arbitration.</p>
<p>The first case of State succession under Asian investment treaties was <em>WWM v Kazakhstan</em>, where a Canadian investor brought a claim against Kazakhstan under the USSR-Canada bilateral investment treaty. The question, in that case, was whether Kazakhstan was bound by the treaty following the dissolution of the USSR. The tribunal found that Kazakhstan was the USSR’s legal successor to the treaty and was bound by it.</p>
<p><strong>TO WALK THROUGH THE RUINED CITIES OF GERMANY IS TO FEEL AN ACTUAL DOUBT ABOUT THE CONTINUITY OF CIVILIZATION …</strong></p>
<p>It is a risky enterprise to build investor relationships with governments in transition, with non-recognized governments, with newly independent States, and with other political entities that are subject to significant instability. The relationships may yield high gains, but they may also be profoundly destructive.</p>
<p>Investment protection mechanisms, investment treaty planning, investment protections built into the State contracts, stellar political risk insurance, risk mitigation in project finance, and other arrangements, are important considerations for investment projects in high sovereign risk jurisdictions that are prone to political volatility.</p>
<p>One imagines a dilapidated train coming from Port Sudan arriving through a one-track railway into Khartoum’s central train station, tired passengers streaming away from the train cars after their lengthy journey. New sleek trains are a rarity in Sudan, even though Sudan Railway is said to operate one of the longest railways in Africa, extending from Port Sudan via Atbara to Khartoum.</p>
<p>Under its 2015 pre-coup arrangements with the Al-Bashir Government, and way before that, as of 2012, multiple subsidiaries of Chinese State-owned enterprises signed a number of arrangements with the Sudanese Ministry of Roads and Bridges, seeking to modernize Sudan’s railway network. It is reported that in 2017, a bit over a year before the coup d’état, China Railway Design Corporation and China Friendship Development International Engineering Design Company signed an agreement to run a feasibility study to build a line linking Port Sudan and Chad’s N’Djamena via Khartoum. Since then, the Sudanese government was deposed and replaced by the transitional government, which will then be replaced in 2020 by a newly formed government. It remains to be seen what will become of those infrastructure arrangements post-2020, and how China will deploy the rights and remedies available to its investors under public international law to protect its investment overseas.</p>
<p> </p>
<p><em><span style="background-color:#FFFF00;">The views expressed in this article do not reflect the views of the authors’ respective law firms or of any organisations they are affiliated with.</span></em></p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/reza_photo.png" width="261" height="305" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/reza-mohtashami-qc"><h2>Reza Mohtashami QC</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Three Crowns LLP, London</strong></p>
<p>Reza Mohtashami QC is an experienced arbitration advocate who has represented clients in more than 80 arbitrations conduced under a variety of arbitration rules in many different jurisdictions. His practice focuses on complex disputes arising out of emerging-market jurisdictions. He has particular expertise in investment treaty arbitrations and has represented both investors and governments in such disputes. Currently based in London, he has previously practised in Paris, New York and Dubai.</p>
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</div> Thu, 09 Jan 2020 07:57:48 +0000admin14880 at http://hk-lawyer.orghttp://hk-lawyer.org/content/coup-d%E2%80%99%C3%A9tat-and-failed-states-investment-crisis#commentsCourt Binds Third Party to Arbitration Agreementhttp://hk-lawyer.org/content/court-binds-third-party-arbitration-agreement
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/contents/exclusively-online" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Exclusively Online</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/arbitration-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Arbitration</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Court Binds Third Party to Arbitration Agreement</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p>In <em><a href="https://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=120155&amp;QS=%282019%7CHKCFI%7C482%29&amp;TP=JU">Dickson Valora Group (Holdings) Co Ltd and another v Fan Ji Qian</a> </em>[2019] CFI 482, the Hong Kong Court of First Instance granted an anti-suit injunction restraining a non-party to a contract from enforcing rights thereunder by bringing court proceedings in the Mainland Chinese court in violation of the contractual arbitration clause.</p>
<p>The case serves as a salient reminder that individuals and companies looking to enforce contractual rights should seek to comply with the relevant contractual dispute resolution provisions even where the individual or company is not itself a signatory to the agreement. </p>
<p><em>Olga Boltenko, Matthew Townsend and Stephanie Tsang, Fangda Partners Hong Kong</em></p>
<p><b>LEGAL BACKGROUND</b></p>
<p>Anti-suit injunctions are not addressed to or binding upon the court in question. Instead, they are directed at a party, which must comply with the terms of such an injunction or face sanctions under Hong Kong law.</p>
<p>Hong Kong courts have derived their power to award anti-suit injunctions from two statutory provisions, namely:</p>
<ol><li>section 21L of the High Court Ordinance (Cap. 4) (“<strong>HCO</strong>”), which empowers a court to grant equitable relief, such as an injunction (whether interlocutory or final), if it finds that it is just or convenient to do so; and</li>
<li>section 45(2) of the Arbitration Ordinance (Cap. 609)(“<strong>AO</strong>”), which similarly empowers a court to grant an interim measure in relation to any arbitral proceedings, whether in or outside of Hong Kong, which have been or are to be commenced.</li>
</ol><p>It is fairly rare, but not unheard of, for Hong Kong courts to restrain a Hong Kong party from pursuing foreign (as opposed to Hong Kong) court proceedings. In 2018 the Hong Kong Court of First Instance (the “<strong>Court</strong>”) relied upon the AO to restrain a party from pursuing PRC proceedings (<a href="http://legalref.judiciary.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=113267&amp;QS=%2B&amp;TP=JU"><em>Arjowiggins HKK2 Ltd v Shandong Chenming Paper Holdings Ltd</em></a> [2018] HKCFI 93; HCCT 53/2015 (19 January 2018))(see the authors’ report <u><a href="http://www.hk-lawyer.org/content/arbitration-related-developments-2018">here</a></u>); and previously in 2015 it relied upon the HCO to restrain a party from pursuing Turkish proceedings (<em>Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi </em>[2015] 3 HKC 246).</p>
<p>By principles established in the English case of <em>Aggeliki Charis Cia Maritime SA v. Pagnan SpA, The Angelic Grace</em> [1995] 1 Lloyd’s Rep 87, 96, a court need not show excessive “diffidence” to a foreign court in circumstances in which the foreign proceedings have been brought in breach of a contractual dispute resolution clause. Specifically, if an injunction is sought to restrain a party from pursuing foreign proceedings brought in breach of an arbitration agreement, the court need feel no diffidence to the foreign proceedings providing that (i) the relief is sought promptly; (ii) the foreign proceedings are not too far advanced; and (iii) there is no other “<em>good reason</em>” for the court not to so exercise its discretion.</p>
<p>Whilst the <em>Angelic Grace</em> principles instill a pro-injunction approach, the English and Hong Kong courts have nonetheless employed them to refuse to grant anti-suit injunctions sought at a late stage in the foreign proceedings (see for instance <em>Sea Powerful II Special Maritime Enterprises (ENE) v Bank of China Limited </em><em>[<a href="http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=104151&amp;QS=%2B&amp;TP=JU">2016</a>] 1 HKLRD 1032; [2016] 3 HKLRD 352 (CA)</em>). </p>
<p>Nor are the Hong Kong courts willing to enforce in Hong Kong a foreign judgment which has been brought in breach of an arbitration clause. Section 3 of the Foreign Judgements (Restriction on Recognition and Enforcement) Ordinance (Cap. 46) (“<strong>FJRREO</strong>”) provides that, <em>inter alia</em>, “<em>a judgement given by a court of an overseas country in any proceedings shall not be recognized or enforced in Hong Kong if the bringing of those proceedings in that court was contrary to an agreement under which the dispute in question was to be settled otherwise than by proceedings in the courts of that country</em>”.</p>
<p><strong>FACTUAL BACKGROUND</strong></p>
<p>The dispute concerned a joint venture relating to a real estate transaction in Jiangsu, China.</p>
<p>By a 2010 Shareholders Agreement (“<strong>SHA</strong>”), Hong Kong incorporated Dickson Holding Enterprise (“<strong>DHE</strong>”), and a Netherlands-incorporated company Moravia CV (“<strong>Moravia</strong>”) agreed to establish a Joint Venture Vehicle (the “<strong>Company</strong>”).</p>
<p>All three parties were signatories to the SHA. DHE’s director, a Hong Kong resident named Mr. Fan, was not. The SHA contained a dispute resolution clause providing for arbitration seated in Hong Kong. </p>
<p>Subsequently in early 2011, the same parties entered into a Supplementary Agreement and an Addendum of the Supplementary Agreement (“<strong>Supplementary Agreement</strong>” and “<strong>Addendum</strong>”). The Addendum made provisions for DHE to receive a completion “<em>success fee</em>” payable by an associated company (the “<strong>Subsidiary</strong>”). Again, neither Fan, nor the Subsidiary were parties to the Addendum.</p>
<p>Following the breakdown of the joint venture relationship, The Company cancelled DHE’s shares.</p>
<p>DHE’s director Fan alleged a breach by the Company and Subsidiary of the “<em>success fee</em>” provisions of the Addendum. In June 2018, he commenced an action against both the Company and the Subsidiary in the Shenzhen Qianhai Cooperation Zone People’s Court (the “<strong>Qianhai Proceedings</strong>”).</p>
<p>The Company and Subsidiary were unaware of these proceedings until August 2018, when Fan obtained a freezing and execution order over their assets. The Company and Subsidiary brought a jurisdictional challenge but it was rejected by the Qianhai Court.</p>
<p>In November 2018, with the Qianhai Proceedings still afoot, the Company and Subsidiary applied to the Court in Hong Kong for an order under section 21L of the HCO restraining Fan from pursuing these proceedings.</p>
<p><b>THE DECISION</b></p>
<p>The judge, Lam J, granted the injunction and ordered Fan to pay the applicants’ costs.</p>
<p>In reaching this determination, Lam J determined four separate issues: (a) whether there is an arbitration clause in the contract being sued upon by Fan, (b) what the court’s approach should be in the absence of privity to the arbitration agreement, (c) whether the application is precluded by issue estoppel arising from a Mainland judgment, and (d) whether there are other reasons why the injunction should be refused.</p>
<p>On the first issue, Lam J determined that the Addendum <em>was</em> in fact subject to the arbitration clause in the Shareholders Agreement.</p>
<p>For the judge, this was a question of contractual interpretation and incorporation. The contractual agreements – the SHA, the Addendum, and the Supplementary Agreement - had complementary nature and purposes. All three documents were executed by the same parties. Furthermore, none contained separate provisions on general matters such as choice of law or dispute resolution which “<em>are of particular importance in a project such as this involving businessmen and entities from multiple jurisdictions</em>”. Accordingly, Lam J determined that the Supplementary Agreement and the Addendum were intended to read as “<em>part and parcel</em>” of the Shareholder Agreement. In his view it was “<em>plain that the general provisions in the [SHA] are intended to govern these …later documents of a supplemental nature</em>”.</p>
<p>As for the second issue in dispute, the Court determined that notwithstanding Fan was not a party to the SHA or the Addendum, the <em>Angelic Grace</em> approach should nonetheless be employed with respect to Fan’s bringing of foreign proceedings.</p>
<p>Although the arbitration agreement in the SHA had no governing law clause, Lam J found it to be governed by the law of the SHA, namely Hong Kong law. He determined that the <em>Contracts (Rights of Third Parties) Ordinance (Cap 623)</em> did not apply in this matter as the Ordinance came into operation after the relevant agreements were executed. However, he nonetheless found that “<em>there exist various devices at common law which are sometimes employed to temper the structures of the doctrine of privity</em>”, arising from principles of trusteeship, assignment and agency.</p>
<p>The Court drew inference from a number of English vessel-related authorities, in which an “assignee” or “subrogee” sought to enforce legal rights under an agreement in fora inconsistent with the provisions of the dispute resolution provisions of those agreements. In those cases, the Courts applied <em>Angelic Grace</em> principles notwithstanding that the party was a non-signatory to the agreement in question. For Lam J “<em>the basis for the court’s intervention is the same in the case of a claimant who has become entitled to enforce an obligation but is not a party to a contract of any kind with the defendant, as in the case of a claimant who is an original party to an arbitration agreement</em>”. The court will therefore be willing to intervene by granting an anti-suit injunction to restrain such a claimant from enforcing the obligation by proceedings abroad instead of by arbitration.</p>
<p>On the third issue under deliberation, the Court found that no estoppel arose from the decisions in the Qianhai Proceedings. These had been brought contrary to the dispute resolution provision in the SHA. Therefore, pursuant to section 3 of the FJRREO, the decision of Qianhai Court would neither be enforced nor recognized in Hong Kong.</p>
<p>On the fourth issue, the Court determined there were no other “<em>good reasons” </em>for the Court not to exercise its discretion to award the injunction. The applicants’ delay in bringing the application was not “<em>inexcusable or inordinate</em>” given that (a) they had brought it “<em>slightly more than two months after learning of the Qianhai [P]roceedings</em>” and (b) a further “flurry of steps” had been required in the Mainland to ameliorate the effect of the orders in the Qianhai Proceedings. Fan had suffered no prejudice from the progress of the Qianhai Proceedings which “<em>had not gone on to an advanced stage</em>” of a merits hearing. The applicants’ conduct was not abusive in view of the circumstances, including their prompt efforts to defend the Qianhai Proceedings. Nor was there a valid comity consideration arising from inconsistent decisions of the Hong Kong arbitrator and Qianhai Court. This consideration was in any event reduced in view of the fact that the foreign proceedings are inconsistent with the contractual mode of dispute resolution. </p>
<p><strong>CONCLUSION</strong></p>
<p>This case lends support to the common sense proposition that an individual or an entity should not be allowed to seek enforcement of rights under a contract or suite of contracts in violation of the contractual dispute provisions, in particular when in the presence of a valid arbitration agreement. With the <em>Dickson Valora</em> findings, the Hong Kong courts take that proposition further by applying non-signatory theories to bind a non-party to the arbitration agreement and restrain it from pursuing foreign litigation. </p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/matthew-townsend"><h2>Matthew Townsend</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Registered Foreign Lawyer, Fangda Partners </strong></p>
<p>Matthew Townsend is an arbitration lawyer based in Hong Kong. His practice is primarily focused on international arbitration and dispute resolution, often (but not always) involving Chinese parties.</p>
<p>Townsend has experience of arbitration in a number of jurisdictions under a number of different arbitration rules. His practice focuses on the energy, infrastructure, construction, technology and international trade sectors. He has experience acting as advocate at all stages of an arbitration hearing</p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/stephanie-tsang"><h2>Stephanie Tsang</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners</strong></p>
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</div> Tue, 30 Apr 2019 08:11:53 +0000admin14173 at http://hk-lawyer.orghttp://hk-lawyer.org/content/court-binds-third-party-arbitration-agreement#commentsInvestment Protection in China’s Special Economic Zones: Lee Jong Baek Case Studyhttp://hk-lawyer.org/content/investment-protection-china%E2%80%99s-special-economic-zones-lee-jong-baek-case-study
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/investment-law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Investment Law</a></div><div class="field-item"><a href="/practice-areas/arbitration-0" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Arbitration</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Investment Protection in China’s Special Economic Zones: Lee Jong Baek Case Study</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/istock-953470006_opt.jpeg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/istock-953470006_opt.jpeg" width="600" height="400" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p class="rteright"><em><strong>“The trap had a ghastly perfection” <br />
- Stephen King, The Gunslinger</strong></em></p>
<p><strong>Introduction</strong></p>
<p>China’s economic power has surpassed market expectations in the past decades. The World Bank shows China’s GDP growth from US$1.2 trillion in 2000, to US$13.2 trillion in 20171, amongst other indices of the country’s economic development.</p>
<p>The World Bank deems two percent GDP per capita growth rate to be outstanding. China’s annual GDP per capita growth rate has been relatively steady since Deng Xiaoping’s 1978 economic reforms, at around nine percent2.</p>
<p>China’s economic miracle is to a certain extent dependent on foreign direct investment (FDI). The majority of China’s FDI inflows is directed through China’s Special Economic Zones (SEZs). SEZs offer significant tax flexibility along with other incentives to foreign investors. According to the World Bank Group, SEZs are responsible for 22 percent of China’s GDP, 45 percent of total national foreign direct investment, and 60 percent of exports3.</p>
<p>Despite the various investment incentives offered by SEZs, China is considered to be a relatively high sovereign risk destination for foreign investment due to the risks of adverse regulation, expropriation, nationalisation, denial of justice, and other forms of undue government interference4. These risks are particularly high in China’s SEZs, where the concentration of foreign direct investment is the highest.</p>
<p>Are China’s SEZs Stephen King’s trap of “ghastly perfection” for foreign investors?</p>
<p><strong>The Rise of China’s Special Economic Zones</strong></p>
<p>China’s first SEZs were established in 1979-1980 at Hong Kong’s doorstep – in what were then sleepy provincial towns of Shenzhen, Zhuhai, and Shantou. That was followed by a SEZ in Xiamen in Fujian Province, and a SEZ on the Hainan island.</p>
<p>The hallmark of these first SEZs was that in these areas, the local governments were allowed to offer tax incentives to foreign investors without Beijing’s authorisation5. As a result, these four cities have become an epicentre of economic growth for China in the decades to come. Shenzhen’s population alone grew from 30,000 in 1979 to over 12,000,000 in 20186. By mid-80s, only a few years into their existence, the first SEZs accounted for more than 59 percent of China’s FDI7.</p>
<p>In 2014, there were six SEZs in China, 14 open coastal cities, four pilot free trade areas, five financial reform pilot areas, 31 bonded areas, 114 national high-tech development parks, 164 national agriculture technology parks, 85 national eco-industrial parks, 55 national ecological civilisation demonstration areas, and 283 national modern agriculture demonstration areas8.</p>
<p><strong>Investment Protection in Chinese SEZs</strong></p>
<p>Contemporary FDI is particularly vulnerable to the risks of adverse legislation, environmental regulations by the host States that might make investment less economical, and other forms of government interference that do not constitute outright taking or direct expropriation.</p>
<p>With extraordinary FDI concentration in SEZs, a question arises whether foreign investment in SEZs benefits from the same international law protection that is typically available to foreign investors elsewhere in China under bilateral or multilateral investment treaties or under China’s free trade agreements.</p>
<p>Investment protection is accorded to foreign investors on the basis of either bilateral or multilateral investment treaties between the country of investor’s origin and the host State, or under domestic legislation of the host State. Certain investment protections are at times included in investment agreements. Investment protection typically provides for protection against expropriation, nationalisation, and against other forms of undue Government interference with foreign investors and their investments.</p>
<p>Investment protection mechanisms typically guarantee fair and equitable treatment of foreign investment, full protection and security, expatriation of investment returns, and a number of other substantive protections. Investment protection mechanism allows a foreign investor to bring its dispute with the host State out of the domestic courts of the host State and before an international investment tribunal, and to claim compensation for lost investment before a neutral quasi-judicial body. These protections, and in particular the ability to claim compensation in an international forum, significantly decrease sovereign risks and thus make foreign investment in volatile jurisdictions cheaper and more predictable.</p>
<p><img alt="" src="/sites/default/files/field/image/istock-526545408_opt.jpeg" style="width: 100%" /></p>
<p><strong>Three and a Half Generations of Chinese BITs</strong></p>
<p>China maintains a network of over 140 bilateral investment treaties and 23 multilateral treaties with inbuilt investment protection provisions. China is also a party to 21 investment-related instruments10.</p>
<p>China’s numerous bilateral investment treaties (BITs) were negotiated at difference stages of China’s economic development. The first generation Chinese BITs was concluded in 1982-1989. These BITs dispute resolution provisions are limited to determining the amount of compensation for expropriation, thus preventing (in most cases) foreign investors from bringing their disputes that do not concern the amount of compensation to investment treaty arbitration. On the other hand, the first generation of China’s BITs shields host States – China in this case - from most investor-state disputes unless they relate to the amount of compensation for expropriation.</p>
<p>The second generation of China’s BITs offer ICSID as a dispute resolution forum, but the scope of the BIT’s dispute resolution provisions is still limited to disputes concerning the amount of compensation for expropriation. These BITs offer limited protection to foreign investors, for the same reason11.</p>
<p>The third generation of China’s BITs (1998 – present) no longer contains “the amount of compensation for expropriation” wording, and as such, allows for much stronger international law protection.</p>
<p>China is in the process of negotiating a treaty that is likely to open the fourth generation of China’s BITs. This is China’s bilateral investment treaty with the EU. Unfortunately, the treaty negotiations are kept strictly confidential, so predicting the content of this forthcoming mega BIT would be a guess work at this stage12.</p>
<p><strong>Thorny Issues</strong></p>
<p>China’s treaties remain silent on whether they apply to China’s Special Administrative Regions (SARs) – and incidentally, to China’s SEZs.</p>
<p>The applicability of Chinese treaties to China’s SARs had to be argued before an international tribunal13. Fortunately, there has been no indication that the treaties might not apply to SEZs. Indeed, China’s SARs enjoy a high degree of autonomy, including the autonomy to conclude their own investment treaties. SEZ’s autonomy, on the other hand, is limited to adopting local targeted legislation that allows for investment incentives. SEZs do not have the autonomy or the authorisation of the Central Government to enter into investment treaties with foreign states. There appears to be no doubt that SEZs are the “territory of China” within the meaning of China’s investment treaties14.</p>
<p>These preliminary threshold issues aside, China’s SEZs pose an interesting question of international investment law. By nature, SEZs are known for publicising investment incentives15. To attract foreign investment, the SEZs governments offer various investment incentives to foreign investors, and often go as far as to solicit foreign investment. Against this background, it would seem that in China’s SEZs, foreign investors would have better chances at claiming breach of fair and equitable treatment standards by the local governments, as well as breaches of investors’ legitimate expectations in cases of expropriation, nationalisation, and other adverse measures by the SEZs’ governments. In theory, that level of public solicitation of investment will make claiming compensation for breaches of these treaty standards a less laborious task for foreign investors in Chinese SEZs than elsewhere in China.</p>
<p>Another important question that might affect the price of FDI in China’s SEZ is whether adverse government measures such adverse legislation, revocation of licences and concessions, and other undue government interference, may constitute compensable taking under China’s treaties, and whether such unlawful acts of the SEZ administration might engage the international law liability of China as a State.</p>
<p><strong><em>Lee Jong Baek v Kyrgyzstan</em>: are SEZ Investors Protected from Breach of Legitimate Expectations?</strong></p>
<p><em>Lee Jong Baek v Kyrgyzstan</em> is one of the rare investor-state disputes in Asia where a foreign investment project in a SEZ was at the heart of the dispute.</p>
<p>In that case, an investor from South Korea – Mr. Lee Jong Baek – and his investment vehicle - Central Asia FEZ Development Corporation - launched an investment claim against the Republic of Kyrgyzstan under the CIS Convention on the protection of investor’s rights of 28 March 1997 (the Moscow Convention).</p>
<p>The dispute arose out of Mr. Baek’s investment in one of Kyrgyzstan’s SEZs – the Bishkek SEZ. Mr. Lee made his decision to invest in the Bishkek SEZ on the basis of a decree by the President of Kyrgyzstan of 9 December 1994 “On foreign investment zone in Bishkek”. Mr. Lee thus started investing in the Bishkek SEZ in 1997, on the basis of the SEZ legislation and under other Kyrgyz investment assurances.</p>
<p>His investment project began to sour in 2006, when the Bishkek administration revoked the lease agreement on which Mr. Lee’s investment was premised and terminated other associated investment arrangements.</p>
<p>In a dispute before an investment tribunal under the Moscow Convention, Mr. Lee alleged that through a series of measures, Kyrgyzstan effectively expropriated his investment, and that the expropriation was unlawful. He claimed over US$20 million in compensation for his lost project in the Bishkek SEZ.</p>
<p>The tribunal constituted to hear the dispute noted that at the time the investment was made, the SEZ legislation offered significant incentives to foreign investors. From 1999 to 2001, however, the legislation changed for the worse, eventually breaching Mr. Lee’s legitimate expectations and making Mr. Lee’s investment uneconomical16.</p>
<p>The tribunal also found that the acts of the Bishkek SEZ administration qualify as acts of an organ of the Government under the draft ILC Articles on State Responsibility17.</p>
<p>The Lee Jong Baek award gives hope to foreign investors in Chinese SEZ and in SEZs around the globe in that adverse regulation that changes significantly from the time the investment was made, may engage international law liability of the host State.</p>
<p><strong>Conclusion</strong></p>
<p>China’s economic miracle in the last several decades is premised to a certain extent on the establishment and operation of multiple SEZs, where the majority of FDI in China is concentrated. With that level of concentration of FDI, the scope of international law protection afforded to foreign investors in SEZ becomes of crucial importance, in particular when it comes to investor risk analysis and to the costs of investment.</p>
<p>Are SEZs a perfectly organised trap for foreign investors, leaving them to the vagaries of local courts and to the mercy of the SEZ administration in case of disputes with the local governments? In Stephen King’s words, are SEZs “traps of ghastly perfection”?</p>
<p>The latest investor-State case law suggests that SEZs public solicitation of foreign investment and open investor incentives may serve as a basis for investors’ claims if the foreign investment in SEZ is expropriated or if SEZs breach the investors’ legitimate expectations. It is likely that the acts of SEZs’ administration that negatively impact foreign investors may engage the host State’s international law liability.</p>
<p>On the Lee Jong Baek authority, foreign investors are not defenceless in China’s SEZs in cases of expropriation or undue government interference. If anything, foreign investors have better access to international investment protection in particular against breaches of their legitimate expectation and indirect expropriation, because the investment incentives offered by SEZs tend to be public and specific.</p>
<p>In other words, while there is no risk-free investment, SEZs are no more of a “trap” than any other territory in China. In terms of the costs of investment in particular when it comes to political risk insurance, given the public nature of investment incentives in SEZs, foreign investors are better off investing in SEZs than in the territories where incentives are less public and specific. </p>
<p><img alt="" src="/sites/default/files/field/image/istock-697357882_opt.jpeg" style="width: 100%" /></p>
<p>-----</p>
<p>1 See, <a href="https://data.worldbank.org/country/china">https://data.worldbank.org/country/china</a> [last accessed at 4 July 2018]</p>
<p>2 See, Peter Pham, “Is there a secret growth hormone added to China’s economy?”, Forbes, March 2018, available at <a href="https://www.forbes.com/sites/peterpham/2018/03/06/is-there-a-secret-growth-hormone-added-to-chinas-economy/#656df0223f13">https://www.forbes.com/sites/peterpham/2018/03/06/is-there-a-secret-growth-hormone-added-to-chinas-economy/#656df0223f13</a> [last accessed at 5 July 2018]</p>
<p>3 See, Experience Gained in the Development of China’s Special Economic Zones, China Development Bank, available at <a href="https://www.worldbank.org/content/dam/Worldbank/Event/Africa/Investing%20in%20Africa%20Forum/2015/investing-in-africa-forum-chinas-special-economic-zone.pdf">https://www.worldbank.org/content/dam/Worldbank/Event/Africa/Investing%20in%20Africa%20Forum/2015/investing-in-africa-forum-chinas-special-economic-zone.pdf </a>[last accessed at 5 July 2018]</p>
<p>4 See, <a href="https://www.credendo.com/country-risk/china">https://www.credendo.com/country-risk/china</a> [last accessed at 7 July 2018]</p>
<p>5 See, <a href="https://www.britannica.com/topic/special-economic-zone">https://www.britannica.com/topic/special-economic-zone</a>.</p>
<p>6 See, <a href="https://en.wikipedia.org/wiki/Shenzhen">https://en.wikipedia.org/wiki/Shenzhen</a> [last accessed at 5 July 2018]</p>
<p>7 Madeleine Martinek, “Special Economic Zones in China and WTO: Bleak or Bright Future?”, 2014</p>
<p>8 See, <a href="https://www.worldbank.org/content/dam/Worldbank/Event/Africa/Investing%20in%20Africa%20Forum/2015/investing-in-africa-forum-chinas-special-economic-zone.pdf">https://www.worldbank.org/content/dam/Worldbank/Event/Africa/Investing%20in%20Africa%20Forum/2015/investing-in-africa-forum-chinas-special-economic-zone.pdf</a>ne.pdf [last accessed at 5 July 2018]</p>
<p>9 There are numerous studies either advocating in favour of correlation between the volumes of FDI and the number of investment treaties, or stating that no such correlation exists. See, for example, Mary Hallward-Driemeier, “Do bilateral investment treaties attract foreign direct investment? Only a bit - and they could bite,” Policy, Research working paper series; no. WPS 3121. Washington, DC: World Bank, available online at <a href="http://documents.worldbank.org/curated/en/113541468761706209/pdf/multi0page.pdf">http://documents.worldbank.org/curated/en/113541468761706209/pdf/multi0page.pdf</a> [last accessed at 7 July 2018]</p>
<p>10 UNCTAD statistics, available at <a href="http://investmentpolicyhub.unctad.org/IIA/CountryIris/42#iiaInnerMenu">http://investmentpolicyhub.unctad.org/IIA/CountryIris/42#iiaInnerMenu</a> [last accessed at 5 July 2018].</p>
<p>11 See, J Chaisse, L Nottage, International Investment Treaties and Arbitration Across Asia, February 2018, pp 556 et seq.</p>
<p>12 Olga Boltenko, The rise of the RCEP: Regional Multilateralism and its Impact on the EU-China BIT, The Hong Kong Lawyer, 16 March 2018.</p>
<p>13 The applicability of China’s BITs to SARs was at the heart of an investment dispute between Sanum (a Macanese investor) and Laos in 2013-2018. Laos argued that the China-Laos BIT does not extend to Macau, and that for this reason, a Macanese investor is not entitled to engage the treaty’s investment protection mechanisms. The Singapore Court of Appeal, who had supervisory powers over that arbitration, ultimately decided that the treaty applies to Macao. At a press conference in October 2016, China’s Foreign Ministry Spokesperson openly disagreed with the decision of the Singapore Court of Appeal. She said: “[] as a principle, the investment agreements between the central government and foreign countries do not apply to SARs, unless otherwise decided by the central government after seeking the views of the SAR governments and consulting with the other contracting parties of the agreement.”</p>
<p>14 For example, the Australia-China BIT defines territory as “Territory in relation to a Contracting Party includes the territorial sea, maritime zone or continental shelf where that Contracting Party exercises its sovereignty, sovereign rights or jurisdiction.”</p>
<p>15 For example, the Shenzhen SEZ operates on the basis of multiple regulations that cover a number of vital aspects of investment activities - the Regulations of the Shenzhen Special Economic Zone and Land Management, Provisional Rules of the Shenzhen Special Economic Zone on the Resident Offices of Foreign Enterprises, on the Promotion of Financial Development, on the Cooperative Stock Companies, on Venture Capital, on the Encouragement of Overseas Chinese, Compatriots of Hong Kong, Macao, and Taiwan to Make Contributions to the Promotion of Education, and many others.</p>
<p>16 See, <em>Lee Jong Baek et al v Kyrgyzstan</em>, Award dated 13 November 2013, page 11 and page 38 (available in Russian).</p>
<p>17 See, ibid, pp 38-39.</p>
<p>-----</p>
<p><strong>Editorial Note: </strong>This article is a write up of a speech delivered by the author at the FDI in Asia Forum in Hong Kong in March 2018. It will serve as a basis for a more detailed publication in the Forum materials. The views expressed in this article are not representative of the views of Fangda Partners. All mistakes are author’s alone.</p>
</div></div></div><div class="field field-name-field-jurisdictions field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Jurisdictions:&nbsp;</div><div class="field-items"><div class="field-item"><a href="/jurisdictions/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel">China</a></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item" rel="dc:subject"><a href="/tags/china-special-economic-zones" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China Special Economic Zones</a></div><div class="field-item" rel="dc:subject"><a href="/tags/investment-protection" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">investment protection</a></div></div></div><div class="view view-authors-of-article view-id-authors_of_article view-display-id-entity_view_1 view-dom-id-0672410bd784fded46e053739a8ccaeb">
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Tue, 08 Jan 2019 09:45:00 +0000admin13795 at http://hk-lawyer.orghttp://hk-lawyer.org/content/investment-protection-china%E2%80%99s-special-economic-zones-lee-jong-baek-case-study#commentsChina’s Rising Trade Multilateralism: Hong Kong to Shield China’s Greater Bay Areahttp://hk-lawyer.org/content/china%E2%80%99s-rising-trade-multilateralism-hong-kong-shield-china%E2%80%99s-greater-bay-area
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/trade-law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Trade Law</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">China’s Rising Trade Multilateralism: Hong Kong to Shield China’s Greater Bay Area</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/rtx39sh4_opt.jpeg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/rtx39sh4_opt.jpeg" width="600" height="400" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><blockquote><p>“We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs.”</p>
<p><em>– Donald J. Trump</em></p>
</blockquote>
<p>The Trump administration has marked the past few months of the global economic history with a series of global trade war provocations, imposing tariffs on goods originating from America’s traditional trade allies and creating multiple global trade barriers. China, on the other hand, has shown a surprisingly resolute commitment to the WTO and more generally, to the existing global multilateral trade arrangements.</p>
<p>The new policy in the context of China’s rising trade multilateralism is Beijing’s masterplan for the Greater Bay Area. The masterplan is designed to link Hong Kong and Macao with nine major manufacturing hubs in the Pearl River Estuary. The Greater Bay Area is an initiative directed at trade liberalization and removal of trade barriers between China and its trade partners, with Hong Kong emerging as a legal hub for international law protection of Chinese outbound investment.</p>
<p><strong>Contemporary China-US trade disagreements: key dates</strong></p>
<p>Amidst the lingering discontent with what it loosely described as China’s “unfair trade practices and intellectual property theft”, on 22 March 2018, the US announced its intention to impose tariffs of USD50 billion on a large number of categories of Chinese goods.</p>
<p>On 2 April 2018, the Chinese Ministry of Commerce imposed tariffs on 128 products originating from the USA. On 3 April 2018, the US published a list of over 1,300 categories of goods originating from China on which it planned to impose tariffs.</p>
<p>On 4 April 2018, China imposed additional 25% tariffs on airplanes, automobiles, and soybeans originating from the US.</p>
<p>On 5 April 2018, the US announced that it would consider USD100 billion in additional tariffs. Further threats ensued.</p>
<p>On 15 June 2018, the White House announced that the US would impose a 25% tariff on USD50 billion of Chinese goods, with the first USD34 billion commencing on 6 July 2018.</p>
<p>Global markets reacted violently to the unravelling trade war. In early April, when the mutual threats were at their highest, the US markets indices fell to their lowest:</p>
<p>“stocks post worst start to April since the Great Depression, with the S&amp;P 500 closing down more than 2.2 percent Monday, the broad market index clinched its worst start to April since 1929.”</p>
<p>On 5 April 2018, China filed a request for consultation with the WTO. China’s WTO filing sent a message of hope to the world that China’s preference is for multilateral trade arrangements and the WTO dispute resolution mechanism, rather than for a fully-blown trade war. On the same date, the global markets recovered from the early April uncertainty, only to plunge again following further tariff threats.</p>
<p>The ensuing bilateral trade uncertainty has impacted not only global markets, but also – more specifically – the US and Chinese markets. In China, for example, growth in manufacturing sector slowed down in June, with the Chinese manufacturers facing rising input costs and a noticeable decline in export orders.</p>
<p>With the US markets becoming uneconomical for China as a result of the newly imposed tariffs and trade barriers, China is seeking new outbound markets, as well as new supply markets. It is against this backdrop that China’s multilateral trade initiatives have gained force.</p>
<p><strong>China’s Position towards multilateral trade &amp; investment</strong></p>
<p>On 28 June 2018, the State Council Information Office of the People’s Republic of China published a 27-page long White Paper “China and the World Trade Organization.”</p>
<p>In the opening lines of the White Paper, China declared its support for the multilateral trade:</p>
<p>“The multilateral trading system, with the WTO at its core, is the cornerstone of international trade and underpins the sound and orderly development of global trade. China firmly observes and upholds the WTO rules, and supports the multilateral trading system that is open, transparent, inclusive and non-discriminatory. China has participated in all aspects of WTO work, made its voice heard and contributed its own proposals on improving global economic governance. China is an active participant, strong supporter and major contributor in the multilateral trading system.”</p>
<p>China’s position is in contrast to the Trump Administration preference for reinstalling trade barriers and return to the trade bilateralism of the 1960ies. On 23 January 2017, having commenced his office, President Trump signed Presidential Memorandum Regarding Withdrawal of the United States from the Trans-Pacific Partnership Negotiations and Agreement, stating:</p>
<p>“[i]t is the intention of my Administration to deal directly with individual countries on a one-on-one (or bilateral) basis in negotiating future trade deals.”</p>
<p>In line with their respective trade policies, the US is breaking down its multilateral commitments, including recently to the WTO with its controversial draft bill on “Fair and Reciprocal Tariff Act”, and earlier last year with the US withdrawal from the Trans-Pacific Partnership Agreement and from a number of other global multilateral initiatives.</p>
<p>China, on the other hand, continues to pursue its global multilateral trade initiative along Belt &amp; Road. The Belt &amp; Road Initiative is a well-reported China-led global multilateral investment and trade programme. China’s Greater Bay Area is perhaps less known to the world, although an integral part of China’s multilateral efforts and of a crucial importance to Hong Kong.</p>
<p><strong>The Greater Bay Area Masterplan</strong></p>
<p>The total population of the Greater Bay Area cities is nearly 67 million. This area is more densely populated than the Tokyo Metropolitan Area - the world’s largest city cluster with a population of 44 million. The Greater Bay Area has a combined GDP of US$1.34 trillion, which is only a bit behind the US$1.61 trillion of the Greater New York and US$1.78 trillion of the Greater Tokyo.</p>
<p>Shenzhen – an important city of the Greater Bay Area - is a strong scientific and technological innovation hub. The Greater Bay Area is at the heart of a network of supply chains that link Guangdong to the rest of the world and is able to draw on a strong manufacturing base. Hong Kong provides a sophisticated judicial system along with a major legal and financial services hub.</p>
<p>On this basis, in January 2009, the National Development and Reform Commission issued an “Outline of the Plan for the Reform and Development of the Pearl River Delta Region (2008-2020)”. The outline suggested a plan to create a major megalopolis in the Pearl River Estuary by uniting China’s Special Administrative Regions Hong Kong and Macau, and nine South Chinese manufacturing hubs Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing.</p>
<p>In September 2011, a group of trade experts from Hong Kong, Macau, Shenzhen, Dongguan, Guangzhou, Zhuhai, and Zhongshan – all major South China legal, financial, manufacturing, and research and development hubs – issued a study “The Action Plan for the Bay Area of the Pearl River Estuary”. The study aims at creating a single area of unimpeded trade, manufacturing, research, development, where there would be free circulation of goods, services, capital, and resources, within the Greater Bay Area.</p>
<p>In July 2017, the National Development and Reform Commission signed a framework Greater Bay Area Agreement with the governments of Guandong, Hong Kong, and Macau.</p>
<p>The framework agreement set the premise for the development – in particular for Hong Kong – the safeguards for Hong Kong’s “one country, two systems”. It then outlines the key cooperation areas, including infrastructure connectivity (of which the Hong Kong-Zhuhai-Macau bridge has become a part), market integration, development of a global technology and innovation hub (including the Hong Kong – Shenzhen Innovation and Technology Park in the Lok Ma Chau Loop), fostering new smart industries, and a number of others. It is expected that Beijing will authorise the establishment of a free trade port in the Greater Bay Area as well.</p>
<p>The detailed masterplan for the Greater Bay Area integration was due to be released earlier this year. However, the trade uncertainty with the US appears to have delayed the process. In light of the China-US trade disagreements, Beijing might want to adjust its initial masterplan to ensure the multilateral nature of the Greater Bay Area.</p>
<p><strong>Protecting Greater Bay Area: Hong Kong’s investment treaties and free trade agreements</strong></p>
<p>Hong Kong enjoys a high degree of autonomy as China’s Special Administrative Region. Article 13 of the Basic Law entitles Hong Kong is to conduct its own relevant foreign affairs.</p>
<p><strong><u><em>Hong Kong Investment Treaty Programme</em></u></strong></p>
<p>Within that ambit, Hong Kong maintains nineteen bilateral investment treaties (BITs). These BITs offer international law investment protection to Hong Kong-based investors who invest in Hong Kong’s nineteen investment treaty partners. In essence, these treaties protect Hong Kong investors from expropriation, nationalization, denial of justice, and other undue government interference with Hong Kong investors in the host States.</p>
<p>These treaties also guarantee fair and equitable treatment to Hong Kong investors and their investments, full protection and security, as well as protection against unreasonable or discriminatory measures that impair the management, maintenance, use, enjoyment or disposal of the investment. The majority of these treaties also contain umbrella clauses that typically operate to elevate contract breaches to treaty breaches, thus potentially engaging the host State’s international law liability for breaches of contracts with Hong Kong investors.</p>
<p>Hong Kong’s BITs guarantee that Hong Kong investors will not be subjected to treatment less favourable than the domestic investors of the host States. The BITs also guarantee the return of investments, as well as admittance of Hong Kong investments and often transparency of laws.</p>
<p>Hong Kong’s BITs contain subrogation provisions. These provisions mean that a Hong Kong investor may submit a compensation claim to its political risk insurer in the insured event (for example, in cases of expropriation or nationalization of assets in the host State), and the host State will recognize the transfer from the investor to the insurer of the right to claim against the host State with respect to the investment. These provisions lay foundation for the flourishing political risk insurance businesses out of Hong Kong, servicing Chinese investors who channel their investments in Belt &amp; Road through Hong Kong.</p>
<p>Finally, the BITs contain the “teeth” of investment protection mechanisms – dispute resolution provisions allowing Hong Kong investors to sue the host States in international arbitration as opposed to resolving investment disputes in domestic courts of the host State.</p>
<p>Hong Kong BITs constitute a fundamental departure from the Chinese BITs, at times offering more balanced international law protections to those Chinese investors who invest through Hong Kong.</p>
<p><u><em><strong>Three generations of Chinese BITs</strong></em></u></p>
<p>China maintains an extensive network of over 120 BITs. The sheer number of these BITs has allowed investment and trade lawyers to categorise China’s BITs into three generations.</p>
<p>The first generation Chinese BITs was concluded in 1982-1989. These BITs contain very limited investment protections. This is largely because the first generation of Chinese BITs’ dispute resolution provisions are limited to determining the amount of compensation for expropriation, thus preventing (in most cases) the Chinese investors from bringing their disputes to investment arbitration.</p>
<p>The second generation of China’s BITs emerged after China acceded to the ICSID Convention (1990-1997). These treaties refer to ICSID as a venue to arbitrate investor-state disputes concerning the amount of compensation for expropriation. They also offer a somewhat limited protection to Chinese investors, for the same reason.</p>
<p>The third generation of China’s BITs (1998 – present) has removed “the amount of compensation for expropriation” wording from Chinese treaties, allowing for much stronger protections to Chinese investors. This is a major breakthrough in China’s treaty policy. Unfortunately, the number of the third generation BITs is somewhat limited compared to China’s previous treaty generations. This patchwork creates a somewhat unpredictable investment protection environment for the Chinese investors in Belt &amp; Road.</p>
<p><u><em><strong>Applicability of China’s investment treaties to Hong Kong investors</strong></em></u></p>
<p>While the latest generation of China’s treaties offers substantive investment protections to Chinese investors overseas, it remains an open question whether China’s treaties extend to Hong Kong. In other words, would a Hong Kong investor be able to benefit from China’s investment treaties to protect its outbound investment? This question has not been settled in international law.</p>
<p>In a relatively recent investment dispute between a Macanese investor and Laos, China’s Embassy in Vientiane issued a note verbale in which it clarified that the China-Laos BIT did not extend to Macau. The application of the China-Laos BIT to Macau was then at the heart of Singapore set aside proceedings in the Sanum v Laos arbitration. There, the Singapore Court of Appeal decided that the China-Laos bilateral investment treaty did extend to Macau, and as such, protected Macanese investors.</p>
<p>There is no doubt that should a similar question arise with respect to Hong Kong, the Sanum v Laos saga and the status of China’s SAR in the context of investment protection will be brought to light.</p>
<p><u><em><strong>Hong Kong investment treaties for the Greater Bay Area</strong></em></u></p>
<p>The Hong Kong treaty program is much more balanced than China’s first BIT generations. It is designed specifically to protect Hong Kong investment overseas. In addition to its nineteen BITs, Hong Kong also maintains six multilateral treaties with inbuilt investment protection mechanisms. Most of these multilaterals are free trade agreements – aimed at liberalizing trade and investment and at removing trade barriers.</p>
<p>Hong Kong’s latest free trade agreement was concluded in November 2017 with the ASEAN block. It is one of the most sophisticated multilateral treaties in the region. Importantly, it protects Hong Kong investors in the ASEAN block, where those investors are traditionally active.</p>
<p>The Greater Bay Area is designed to include – in addition to Hong Kong – Macau, Shenzhen, Guangzhou, and a number of other major South Chinese cities. It is open to those investors operating in the Greater Bay Area to channel their overseas investments through Hong Kong, in order to benefit from the international law protection of Hong Kong’s treaty programme.</p>
<p><strong>Conclusion</strong></p>
<p>While the Trump administration has taken a leap back in time towards the bygone era of trade bilateralism, the Chinese Government continues implementing its global multilateral trade initiatives, including the Belt &amp; Road.</p>
<p>The juxtaposition of these two mutually exclusive trade policies – Trump’s policy of isolation and bilateralism, and Xi’s policy of trade liberalization and multilateralism – has played a peculiarly important role for Hong Kong.</p>
<p>In the past few years, the Chinese Government has been developing the Greater Bay Area in the context of its multilateral Belt &amp; Road investment and trade initiative.</p>
<p>The Greater Bay Area is a planned megalopolis integrating Hong Kong and Macau into a single investment and trade zone with nine major South Chinese cities including Shenzhen and Guangzhou. The Greater Bay Area is strategically designed to benefit from the cities’ immediate proximity to manufacturing hubs, scientific and technological centres, as well as to legal and financial services centres in Hong Kong.</p>
<p>Through its network of bilateral investment treaties and free trade agreements, Hong Kong offers to its investors – and to the Greater Bay Area investors - significant substantive investment protections for their operations overseas, in particular along China’s Belt &amp; Road Area.</p>
<p>Hong Kong’s latest acquisition – its free trade agreement with the ASEAN block – expands that protection to investment-hungry and resources-rich Southeast Asian States. With its new free trade agreement with the ASEAN block, Hong Kong is placed on Southeast Asia’s investment protection map for Chinese outbound investment, in particular originating from the Greater Bay Area. </p>
</div></div></div><div class="field field-name-field-jurisdictions field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Jurisdictions:&nbsp;</div><div class="field-items"><div class="field-item"><a href="/jurisdictions/hong-kong" typeof="skos:Concept" property="rdfs:label skos:prefLabel">Hong Kong</a></div></div></div><div class="view view-authors-of-article view-id-authors_of_article view-display-id-entity_view_1 view-dom-id-9c929ea8148bc8febb417f5c96add838">
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Fri, 03 Aug 2018 06:18:51 +0000admin13251 at http://hk-lawyer.orghttp://hk-lawyer.org/content/china%E2%80%99s-rising-trade-multilateralism-hong-kong-shield-china%E2%80%99s-greater-bay-area#commentsHong Kong’s Role in Contemporary Treaty-Making Practice, Treaty-Based Environmental Carve-Outshttp://hk-lawyer.org/content/hong-kong%E2%80%99s-role-contemporary-treaty-making-practice-treaty-based-environmental-carve-outs
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Hong Kong’s Role in Contemporary Treaty-Making Practice, Treaty-Based Environmental Carve-Outs</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/international-law-1_0.jpeg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/international-law-1_0.jpeg" width="600" height="400" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p><strong>I. Introduction: Criticisms</strong></p>
<p>Since the commencement of the Trump administration, the world has witnessed a surge in criticism of investor-state dispute settlement mechanisms. Critics describe the system as infringing upon the rights of sovereign states to regulate matters of health, safety and environment, within their own territories. They criticize the system for allowing foreign corporations to sue states for adverse regulation even if the regulation is there to protect matters of vital public concern. Finally, critics accuse the system of being biased towards investors and hostile towards developing states.</p>
<p>In May 2015, Lise Johnson and Lisa Sachs of the Columbia Centre on Sustainable Development in the US published a policy paper in which they conclude that investor-state dispute settlement mechanism - ISDS - cannot be used for anything but evil:</p>
<p><em>“Multinational companies are increasingly using ISDS to challenge the legal and regulatory systems and policy choices of the contracting states, posing a serious and growing risk to the ability of states to govern in the public interest.</em></p>
<p><em>ISDS is a mechanism that allows foreign individuals and foreign companies to sue host country governments through ad hoc arbitration proceedings rather than through normal domestic administrative and judicial channels.” <a href="http://ccsi.columbia.edu/files/2015/05/Investor-State-Dispute-Settlement-Public-Interest-and-U.S.-Domestic-Law-FINAL-May-19-8.pdf"><sup>1</sup></a></em></p>
<p>The grievances that the critics level at ISDS are premised on the early generation of investment treaties. Indeed, with the first Bilateral Investment Treaty (BIT) concluded between Germany and Pakistan in 1958, investment law at the time addressed a global need to provide open-textured protection to foreign investors in fragile jurisdictions.</p>
<p>Without the open-textured, investor-friendly treaties in the wake of the Second World War, foreign direct investment would have been too costly, as it would have reflected the price the foreign investors would have had to pay as a result of high sovereign risk. The early investment treaties were thus negotiated and drafted on that basis. Those early BITs served their purpose, and along the way, they generated a body of case law that may be perceived as investor-friendly. That, in turn, has fueled the current ISDS backlash.</p>
<p>Ironically, the backlash targets contemporary, balanced, sophisticated investment treaties rather than the first generation of BITs. In 2015-2016, when the text of the TPP was being negotiated, the ISDS criticism turned from mild to vile. In an interview to Huffington Post on 10 June 2015, a Foley Hoag partner whose main practice area is investor-state dispute settlement described ISDS as “rogue”:</p>
<p><em>“I had absolutely no idea this was coming,” Parada said. Sitting in a glass-walled meeting room in his offices, at the law firm Foley Hoag, he paused, searching for the right word to describe what has happened in his field. “Rogue,” he decided, finally. “I think the investor-state arbitration system was created with good intentions, but in practice it has gone completely rogue.”</em></p>
<p>When ISDS cases were brought against states under early-generation BITs, the arbitrators deciding these claims were required to interpret protections that were drafted in broad, open-textured terms and for which the State’s main defences lay in customary international law, rather than the text of the BIT. This gave ISDS arbitrators considerable flexibility to determine the meaning of the protections at issue and how they applied to the facts of the dispute at hand.</p>
<p>The disputes that have been brought against the states under the first generation of bilateral investment treaties would, therefore, often find that adverse regulation by the states in an attempt to protect health, safety, and the environment, would constitute expropriation.</p>
<p>Ever since the first cases were brought under NAFTA, there has been a growing concern that the treaties’ prohibition of indirect expropriation might apply to regulatory measures aimed at protecting the environment, health and other welfare interests of society. At the very least, the tribunals seized with deciding those disputes would find the states liable for breaches of Fair and Equitable Treatment standards in the applicable treaties.</p>
<p>In <a href="http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/SDM.aspx?lang=eng"><em>S.D. Myers v Canada</em></a>, the tribunal was appointed to decide whether Canada’s hazardous waste regulation was justified by environmental considerations. The tribunal decided that Canada’s measure that affected the claimant investor’s property was introduced for the primary purpose of protecting the interests of Canada’s waste disposal industry. It followed that the measure was in breach of Canada’s obligations under NAFTA. This finding was made despite NAFTA’s environmental exemption that excluded environmental focused measures from the scope of the treaty’s expropriation provisions:</p>
<p><em>“Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining, or enforcing any measure, otherwise consistent with this Chapter, that it considers appropriate to ensure that the investment activity in its territory is undertaken in a manner sensitive to environmental concerns.”<sup>2</sup></em></p>
<p>In <a href="https://www.biicl.org/files/3928_2000_santa_elena_v_costa_rica.pdf"><em>Santa Elena v Costa Rica</em></a>, the tribunal found that:</p>
<p><em>“Expropriatory environmental measures – no matter how laudable and how beneficial to society as a whole – are in this respect, similar to any other expropriatory measures that a state may take in order to implement its policies: where property is expropriated, even for environmental purposes, whether domestic or international, the state’s obligation to pay compensation remains.”<sup>3</sup></em></p>
<p>The tendency of tribunals in similar cases has been to read down the effect of environmental provisions, thus preserving the original basis of these treaties as investment protection treaties.</p>
<p><strong>II. Response to the Backlash</strong></p>
<p>A line of academic thought has developed in response to that trend, largely in defence of the state’s regulatory space. Ian Brownlie argues in his “Public International Law” treatise that</p>
<p><em>“state measures, prima facie a lawful exercise of powers of governments, may affect foreign interests considerably without amounting to expropriation. Thus, foreign assets and their use may be subjected to taxation, trade restrictions involving licenses and quotas, or measures of devaluation. While special facts may alter cases, in principle such measures are not unlawful and do not constitute expropriation.” <sup>4</sup></em></p>
<p>Professor Sornarajah, an avid adept of the Third World Approaches to International Law (TWAIL) movement, finds that interference on the basis of environmental, health, and safety legislation does not constitute compensable taking in situations in which public harm has already resulted or is anticipated. He also finds that to pay compensation would be to reward a wrongdoer or to recognise an absence of overwhelming public interest in the use of property.<sup>5</sup></p>
<p>In his “The International Law on Foreign Investment”, Professor Sornarajah finds the <em>Santa Elena v Costa Rica</em> dictum to be outdated in the context of general international law and concerns for the environment. Indeed, measures taken to protect the host states from harm arising from environmental situations would be considered regulatory expropriations.</p>
<p>In his view, environmental degradation caused by a foreign investor would justify measures taken by the state. Where a treaty provides for environmental exceptions and carve-outs, such regulatory measures by the state will not amount to compensable expropriation and will not violate investment protection standards such as fair and equitable treatment. He goes as far as to say that even where the environmental carve-outs are not part of the treaties, they could be read into the treaties as part of international law.<sup>6</sup></p>
<p>Fortunately for foreign investors and their counsel, Professor Sornarajah’s views on the role of environmental regulation in investment law are countered by a number of treaty scholars and arbitrators. Charles Brower, at a seminar held in 2000 at the Permanent Court of Arbitration, explained that from an investor’s perspective, any attempt to lower the traditional customary standards of investment protection based on the nature of the particular public purpose for which the taking was effected, would increase the risk (and therefore ultimately the cost) of investing abroad, if not altogether foreclose foreign investment.<sup>7</sup></p>
<p>While Professor Sornarajah and Professor Brower test their conflicting views in academia and in practice, tribunals seized of treaty disputes arising out of environmental measures are largely guided by the wording of the underlying treaty. Thus, it is the words of the underlying treaties that decide the fate of the state’s environmental regulatory space in contemporary investment law. Where the treaty contains no environmental exceptions or carve-outs, it is patently difficult for any treaty tribunal to find that adverse environmental legislation does not constitute compensable taking.</p>
<p>The body of investor-friendly case law that has emerged in the last decade is reflective of the lack of environmental exceptions and carve-outs in the treaties under which the disputes were brought. Fortunately for developing states, the winds of change seem to be sweeping away the risk of the state’s international liability being engaged in matters of environmental regulation.</p>
<p><strong>III. Treaty-based Environmental Carve-outs</strong></p>
<p>Increasingly, contemporary investment treaties and free trade agreements with investment chapters include carve-outs and exceptions that address the effects of investment protections on the host state. These carve-outs and exceptions seek an investment protection regime that would ensure long-term, sustainable development of the host states in the areas of health, safety, and the environment.</p>
<p>Dame Higgins framed the dilemma underlying the debate over investment protection versus conservation of the states’ regulatory powers by asking a question: “who is to pay the economic cost of attending to the public interest involved in the measure in question – is it to be society as a whole, represented by the state, or the owner of the affected property?”<sup>8</sup></p>
<p>The answer to Dame Higgins’s dilemma in the context of modern treaty-making is in treaty-based environmental carve-outs and exceptions. The trend to include environmental carve-outs in contemporary treaties - the “green treaty-making” – is the trend towards expressly conditioning investment protection rights and duties to ensure the host state can legitimately regulate in the area of environmental protection without exposing itself to liability under the treaty.</p>
<p><strong>IV. Hong Kong’s latest treaty-making practice</strong></p>
<p>Hong Kong’s latest treaty that has accommodated global environmental concerns by including environmental carve-outs in its text is the Hong Kong–ASEAN Free Trade Agreement (Hong Kong-ASEAN FTA).</p>
<p>As part of the Hong Kong–ASEAN FTA, the negotiating member-states concluded an Investment Agreement which provides, in Annex 2 (Expropriation and Compensation), that:</p>
<p><em>“non-discriminatory regulatory actions by a Party that are designed and applied to achieve legitimate public welfare objectives, such as the protection of public health, safety, and the environment, do not constitute expropriation”.</em></p>
<p>Thus, adverse regulation that negatively affects foreign investors but is designed to protect public health, safety, and the environment, is unlikely to constitute compensable taking under Hong Kong’s treaty with ASEAN.</p>
<p>The treaty’s language can be easily traced to a similar provision in the Trans-Pacific Partnership Agreement (both the initial version of it, as well as the 11-partite version signed by the remaining member-states in Santiago in March 2018):</p>
<p>“Non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health,37 safety and the environment, do not constitute indirect expropriations, except in rare circumstance (Annex 9-B (Expropriation)).”</p>
<p>Hong Kong’s environmentally-friendly treaty is in line with China’s contemporary treaty-making policy. Expropriation Annex of RCEP’s draft Investment Chapter [October 2015] traces that wording and excludes regulatory measures from the scope of its expropriation provisions:</p>
<p><em>“non-discriminatory regulatory measures by a Party or measures or awards by judicial bodies of a Party that are designed and applied interest or public welfare objectives, such as public health, safety, and the environment, shall not constitute expropriation/s under this Article.”</em></p>
<p><strong>V. Conclusion</strong></p>
<p>Environmental concerns have long been on the global political agenda. These concerns are linked to the global concern for economic development. The latest treaty-making practice, in particular in China and in Hong Kong, is a testament to that relationship of dependence: while states are willing to facilitate foreign direct investment by concluding investment treaties and free trade agreements with investment chapters, they limit the scope of investment treaty protection by carving out measures that are designed to protect the environment.</p>
<p>As Indira Gandhi asked at the 1972 UN Conference on Human Environment: “Are not poverty and need the greatest polluters”? The answer to Gandhi’s rhetorical question, as well as to Dame Higgins’s dilemma, lies in the development of treaty-based environmental carve-outs and exceptions, and Hong Kong is again at the forefront of that development. </p>
<p> </p>
<p>1. <a href="http://ccsi.columbia.edu/files/2015/05/Investor-State-Dispute-Settlement-Public-Interest-and-U.S.-Domestic-Law-FINAL-May-19-8.pdf">http://ccsi.columbia.edu/files/2015/05/Investor-State-Dispute-Settlement-Public-Interest-and-U.S.-Domestic-Law-FINAL-May-19-8.pdf</a> [last accessed at 20 February 2018]</p>
<p>2. Article 1114(1) of NAFTA.</p>
<p>3. (2002) 15 ICSID Rev 72. The passage quoted was cited and followed in Tecmed v Mexico (2003) ICSID ARB(AF)/00/2.</p>
<p>4. Ian Brownlie, “Public International Law”, Oxford University Press, 6th Edition, 2003 at 509.</p>
<p>5. M. Sornarajah, The International Law on Foreign Investment, Oxford University Press, 2004, pp.357-356</p>
<p>6. Ibid, pp.472-473.</p>
<p>7. C. Brower and E. Hellbeck, “The Implications of National and International Environmental Obligations for Foreign Investment Protection Standards, Including Valuation: A report from the front lines”, Kluwer Law International, 2000, p21.</p>
<p>8. R. Higgins “The Taking of Property by the State: Recent Developments in Internationa</p>
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/olga_boltenko_cms_colo_opt_0.jpeg" width="420" height="420" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Mon, 11 Jun 2018 09:04:26 +0000admin13045 at http://hk-lawyer.orghttp://hk-lawyer.org/content/hong-kong%E2%80%99s-role-contemporary-treaty-making-practice-treaty-based-environmental-carve-outs#commentsThe Rise of the RCEP: Regional Multilateralism and its Impact on the EU-China BIThttp://hk-lawyer.org/content/rise-rcep-regional-multilateralism-and-its-impact-eu-china-bit
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/contents/exclusively-online" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Exclusively Online</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/investment-law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Investment Law</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">The Rise of the RCEP: Regional Multilateralism and its Impact on the EU-China BIT</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p> </p>
<p><em>It is impossible to predict the time and progress of revolution. It is governed by its own laws. – Vladimir Lenin</em></p>
<p><em>Those who have knowledge, do not predict. Those who predict, do not have knowledge. – Lao Tzu</em></p>
<p> </p>
<ol style="list-style-type:upper-roman;"><li><strong>Introduction</strong></li>
</ol><p style="margin-left:.75in;"> </p>
<p>China has eyed investment treaties with suspicion and caution for many decades. By the end of 2017 however, the Middle Kingdom has reached a stage at which it is ready to release to the public one of the largest bilateral investment treaties the world has ever known. The China-EU BIT is likely to emerge as a pioneer of a new generation of Chinese investment treaties, in a radical change from China’s successive generations of treaties that have shaped China’s inbound and outbound FDI since March 1982, when China concluded its first BIT (with Sweden).</p>
<p> </p>
<p>The negotiations of the China-EU BIT have been conducted under an impenetrable wall of confidentiality, worthy in the discipline of its keeping perhaps only of the well-guarded secrets of the USSR.</p>
<p> </p>
<p>Despite the secrecy of the negotiations, the latest treaty-making trends, in particular in multilateral treaties in the Asia-Pacific region, offer a credible platform for predictions of what the China-EU BIT might look like. These trends include environmental carve-outs, safeguards of the States' regulatory space in the area of public health and security, links to customary international law when it comes to guarantees of fair and equitable treatment of investments and full protection and security standards, expanded scope of the dispute resolution clause, transparency provisions, possibilities of a standing bilateral investment tribunal, and a number of other forward-looking trends.</p>
<p> </p>
<p>The obvious caveat to the predictions is that, while China is the negotiator of the Treaty, it was not involved in the negotiations of the TPP. China appears to be less environmentally cautious than the TPP member-States, or in any event, the Middle Kingdom does not appear to be prepared to cripple its heavy industries through environmental carve-outs in its treaties. Thus, many of the TPP traces that are visible in the RCEP drafts – such as the environmental carve-outs in particular - might not be present in the China-EU BIT.</p>
<p> </p>
<ol style="list-style-type:upper-roman;"><li value="2"><strong>Negotiations History and Key Data</strong></li>
</ol><p> </p>
<p><em>The China-EU BIT</em></p>
<p> </p>
<p>In 2012, at the outset of EU's and China's "<em>great leap forward</em>" in their trade relationship, the parties jointly announced their desire to open the Treaty negotiations in their "<em>Strategic Agenda for Cooperation for 2020</em>." The China-EU Investment Treaty was given particular prominence in the agenda:</p>
<p style="margin-left:28.35pt;"><em>Negotiate and conclude a comprehensive EU-China Investment Agreement that covers issues of interest to either side, including investment protection and market access. The EU-China Investment Agreement will provide for progressive liberalisation of investment and the elimination of restrictions for investors to each other's market. It will provide a simpler and more secure legal framework to investors of both sides by securing predictable long-term access to EU and Chinese markets respectively and providing for strong protection to investors and their investments. It should replace the existing bilateral investment treaties between China and EU Member States with one single comprehensive agreement covering all EU Member States.</em></p>
<p> </p>
<p>In early 2013, the European Commission published a document entitled "<em>EU-China Investment Relationship – draft impact assessment</em>." In that document, the EU-China Investment Task Force concluded that the existing bilateral relationships between China and a number of EU member-states do not facilitate trans-boundary FDI flows and thus, disadvantage the trade relationship between China and EU as trading blocks.</p>
<p> </p>
<p>In October 2013, the Council adopted the negotiating mandate for the Commission and in November 2013, the launch of negotiations was announced at the 16<sup>th</sup> EU-China Summit. The first round of talks was held in January 2014.</p>
<p> </p>
<p>In September 2016, the EU and China held its 12<sup>th</sup> round of negotiations of the Treaty. The discussions centred on the Treaty's definitions, fair and equitable treatment standard, the minimum standard of treatment requirement and expropriation. Other challenging topics included domestic regulation, sustainable development, the EU proposals on State-owned Enterprises, and on the Treaty's dispute settlement mechanism. This was followed by several rounds of negotiations throughout 2017. The China-EU negotiations continue at the time of writing, with no end in sight.</p>
<p> </p>
<p><strong><em>The RCEP</em></strong></p>
<p> </p>
<p>The Regional Comprehensive Economic Partnership Agreement (‘RCEP’) is a free trade agreement between the ten ASEAN member-states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea, and New Zealand).</p>
<p> </p>
<p>The RCEP, once it enters into force, will become one of the world's largest and most sophisticated free trade agreements. In its scope, it will exceed the TPP magnitude in a wide range of indicators. RCEP will expand the ASEAN market from 600 million people to 3.5 billion.</p>
<p> </p>
<p>While RCEP is at the advanced negotiations stages at the time of writing, it is far from being finalised. A number of iterations of RCEP's investment chapter have been leaked to the public over the past few years, including with China's annotations on the drafts. Thus, the RCEP – where China's negotiations position is much more visible – is one of the very few credible sources at predicting what the China-EU BIT might be like.</p>
<p> </p>
<p><strong><em>TPP-inspired FET and FPS standards in the RCEP and potentially in the China-EU BIT</em></strong></p>
<p> </p>
<p>The Fair and Equitable Treatment (‘FET’) standard in investment treaties has been a controversial issue in investment law for decades. The frequency with which foreign investors attempt to engage the host State's liability under investment treaties with reference to the breaches of the FET standard is as astounding as the success rate of the claimants' FET claims. Tribunals have interpreted the capacious wording of the FET standard in the treaties to include the host State's obligations to act consistently, transparently, reasonably, without ambiguity, arbitrariness or discrimination, in an evenhanded manner, to ensure due process in decision-making and respect investors’ legitimate expectations, at time with an additional obligation to ensure that no denial of justices occurs. In essence, the FET standard is designed to cover everything that does not fall under the auspices of more precise treaty standards, such as expropriation.</p>
<p> </p>
<p>This generous coverage has resulted in the States' greater exposure to treaty claims, which is particularly taxing on developing and least-developed states. The backlash against the generous interpretative practices of the FET standard has generated a more balanced wording in contemporary investment treaties. This balanced wording links the FET standard to customary international law and more specifically, to the minimum standard of treatment of aliens, thus reducing the State's exposure to liability under investment treaties for FET breaches only to those acts that are "<em>shocking</em>" and "<em>egregious</em>".</p>
<p> </p>
<p>Article 9.6(2) of the TPP clarifies that the applicable standard of FET for covered investments is the <em>'customary international law minimum standard of treatment of aliens</em>', thus limiting the TPP states exposure to FET claims.</p>
<p> </p>
<p>The TPP's approach to FET and its explicit link to customary international law has found its way to the October 2015 iteration of RCEP's investment chapter, which provides, in article 12.1, that:</p>
<p> </p>
<p style="margin-left:28.35pt;"><em> '[t]he concepts of 'fair and equitable treatment' and 'full protection and security' do not require treatment in addition to or beyond that which is required under customary international law.'</em></p>
<p> </p>
<p>China's annotated version of the RCEP investment chapter goes beyond a simple reference to the customary international law. It clarifies, in detail, what the FET standard in the RCEP is intended to mean:</p>
<p> </p>
<p><em>3. The concept of "fair and equitable treatment" and "full protection and security" do not require treatment in addition to or beyond that which is required by that standard [customary international law], and do not create additional substantive rights. The obligation in paragraph 1 to provide:</em></p>
<ol style="list-style-type:lower-alpha;"><li><em>Fair and equitable treatment refers to the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process of law and;</em></li>
<li><em>Full protection and security refers to the requirements one each/a Party to provide the level of police protection required under customary international law. </em></li>
</ol><p> </p>
<p>With a fair degree of probability one may assume that this limited standard of FET, with a clear linkage to customary international law, will find its way to the China-EU BIT.</p>
<p> </p>
<p><strong><em>TPP-inspired expropriation provisions in the RCEP and potentially in the China-EU BIT</em></strong></p>
<p> </p>
<p>Protection from illegal expropriation is by far the main substantive protection that is awarded to foreign investors under investment treaties. On the basis of expropriation provisions of investment treaties, foreign investors are entitled to bring treaty claims against their host States for conduct attributable to the States that constitutes either direct taking of property, or has the effect of substantially depriving the investment of its value, or depriving the investor if its ability to manage use, or control its investment in a meaningful way.</p>
<p> </p>
<p>While direct expropriation appears relatively straightforward, indirect expropriation has posed a number of conceptual issues in the investment community. The latest controversy has arisen out of the concept of the States' right to regulate matters of public concern, such as environment, health, and security, within their own territories. Such regulatory measures often negatively affect foreign investment and thus expose the host States to treaty claims.</p>
<p> </p>
<p>Contemporary investment treaties, and in particular regional free trade agreements such as the TPP( CPTPP), contain carefully-drafted carve-outs that exclude the States' regulatory measures intended to regulate matters of public concern from the scope of expropriation provisions.</p>
<p> </p>
<p>Item 3 of the TPP Expropriation Annex does just that:</p>
<p> </p>
<p style="margin-left:28.35pt;"><em>[n]on-discriminatory regulatory actions that are designed to protect legitimate public welfare objectives [...] do not constitute indirect expropriations, except in rare circumstances.</em></p>
<p> </p>
<p>Expropriation Annex of RCEP’s Investment Chapter [October 2015] traces that wording and excludes regulatory measures from the scope of its expropriation provisions:</p>
<p style="margin-left:28.35pt;"><em>non-discriminatory regulatory measures by a Party or measures or awards by judicial bodies of a Party that are designed and applied interest or public welfare objectives, such as public health, safety, and the environment, shall not constitute expropriation/s under this Article.</em></p>
<p style="margin-left:28.35pt;"> </p>
<p>The Chinese annotated version of the RCEP draft goes beyond that simple carve-out and provides that:</p>
<p style="margin-left:28.35pt;"><em>[expropriation] is intended to reflect customary international law concerning the obligation of States with respect to expropriation. </em></p>
<p> </p>
<p>Chances are that China, a heavily regulated jurisdiction, will continue the trend of regulatory carve-outs and insist on including a qualified carve-out in the China-EU BIT, as well as a clear link to the expropriation standard to customary international law.</p>
<p> </p>
<p><strong>TPP-inspired balancing provision in the RCEP and potentially in the China-EU BIT</strong></p>
<p> </p>
<p>The latest generation of investment treaties and free trade agreements, in their attempts to safeguard the States' regulatory space, have conceived what is known to be a "<em>balancing provision</em>" that specifically allows the States to regulate matters of environment and health within their territory without being exposed to the risks of expropriation claims.</p>
<p> </p>
<p>Article 9.16 of the TPP's Investment Chapter provides that:</p>
<p> </p>
<p style="margin-left:28.35pt;"><em>Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.</em></p>
<p> </p>
<p>The RCEP Investment Chapter 2.1.3 [October 2015] reproduces this wording almost verbatim, with a number of variations:</p>
<p> </p>
<p style="margin-left:28.35pt;"><em>Nothing in this Chapter shall be interpreted to restrict the rights of a Party to formulate, modify, amend, apply or revoke its laws, regulations and policies. Each Party retains the right to exercise discretion with respect to regulatory, compliance, investigatory, and prosecutorial matters, including discretion regarding allocation of resources and establishment of penalties.</em></p>
<p style="margin-left:28.35pt;"> </p>
<p>Interestingly, the Chinese annotated version of the RCEP Investment Chapter does not contain a similarly worded balancing provision. It remains to be seen whether the RCEP balancing provision will negotiate its way to the final version of the China-EU BIT.</p>
<p> </p>
<ol style="list-style-type:upper-roman;"><li value="3"><strong>Conclusions</strong></li>
</ol><p> </p>
<p>In 2013, in its Impact Assessment Report on the EU-China Investment Relations, the European Commission outlined five possible scenarios according to which the parties' trade relationship might evolve:</p>
<ol><li>No policy change; China and the EU will continue to operate on the patchwork of individual bilateral investment treaties between China and the European Union member-States;</li>
<li>China and EU will implement a stand-alone Bilateral Investment Treaty;</li>
<li>China and EU will implement a separate agreement combining investment protection with market access;</li>
<li>China and EU will integrate investment protection and market access regimes into the currently ongoing negotiations of the Partnership and Cooperation Agreement; or</li>
<li>China and EU will sign a comprehensive free trade agreement.</li>
</ol><p> </p>
<p>Numerous policy and negotiations rounds later, towards the end of 2017, it is apparent that the second option – a China-EU Bilateral Investment Treaty – is the only option that survived. In the years to come, having discarded the remaining four scenarios, the world will see one of its largest bilateral investment treaties – the China-EU BIT. The Treaty emerges as an example of intricate, elaborate, complex negotiations and drafting process run by two equally powerful negotiators.</p>
<p> </p>
<p>In light of China’s active and vocal role in the RCEP negotiations, it transpires that China might be prepared to move away from its traditional treaty practice and negotiate a treaty that will inform a new generation of Chinese BITs. The more detailed textual predictions are that the China-EU BIT will contain at the very least:</p>
<p> </p>
<ol><li>An RCEP- inspired expropriation provision that links the standard of expropriation to customary international law and carves out from the scope of the expropriation provision the parties' regulatory measures intended to protect matters of public policy such as environment, health, and public safety and security;</li>
<li>A RCEP- inspired FET standard that is linked to customary international law and is described as limited to the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process of law; and</li>
<li>Potentially a balancing provision that safeguards the states regulatory space.</li>
</ol><p> </p>
<p>Winston Churchill said at a conference in Cairo on 1 February 1943, that he “<em>always avoids prophesying beforehand, because it is a much better policy to prophesy after the event has already taken place</em>”. And yet, with China’s active role in the RCEP negotiations, and the relative transparency of the RCEP negotiations process, the predictions of the main features of the China-EU BIT might be made with a degree of certainty.</p>
<p> </p>
</div></div></div><div class="field field-name-field-jurisdictions field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Jurisdictions:&nbsp;</div><div class="field-items"><div class="field-item"><a href="/jurisdictions/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel">China</a></div></div></div><div class="view view-authors-of-article view-id-authors_of_article view-display-id-entity_view_1 view-dom-id-df0c5b3b12850a38eb46a891f017648e">
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/olga_boltenko_cms_colo_opt_0.jpeg" width="420" height="420" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
</div> </div> </div>
</div>
</div> Fri, 16 Mar 2018 01:37:51 +0000admin12634 at http://hk-lawyer.orghttp://hk-lawyer.org/content/rise-rcep-regional-multilateralism-and-its-impact-eu-china-bit#commentsPolitical Risk Insurance on the Rise along the Belt & Road: A Viable Alternative to Investment Arbitration?http://hk-lawyer.org/content/political-risk-insurance-rise-along-belt-road-viable-alternative-investment-arbitration
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/insurance-law" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Insurance Law</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Political Risk Insurance on the Rise along the Belt &amp; Road: A Viable Alternative to Investment Arbitration?</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/istock-598785540_opt.jpeg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/istock-598785540_opt.jpeg" width="600" height="400" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p><em>"And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.” – Anais Nin</em></p>
<hr /><p>* The article traces a public lecture held in Hong Kong on 12 July 2017, organised jointly by CMS Hasche Sigle Hong Kong and the Hong Kong International Arbitration Centre. The lecture was delivered by Timothy Histed, head of MIGA’s South and South East Asia operations.</p>
<p><strong>The Origins: Hochtief’s Struggle in Argentina</strong></p>
<p>In 1991, Hochtief AG – a major German contractor – won a concession over one of the largest infrastructure projects in Argentina (see Award, ICSID Case No. ARB/07/31, December 21, 2016). Hochtief was to construct and operate a 608-meter long four-lane cable-stayed bridge linking the cities of Rosario, in Santa Fe province, and Victoria, in Entre Ríos province, through a crossing over the Paraná river. Argentina was to pay regular subsidies towards the project.</p>
<p>In 1998, Argentina spiralled into a major economic crisis. The crisis permeated all aspects of the country’s life, and resulted in economic, financial, institutional, political, and social collapse. When the crisis peaked, Hochtief’s project was well advanced – Hochtief’s bridge was hanging with its ends loose over the Paraná river when the Argentinean Government changed its laws, stopped contributing to the project, and eventually terminated the concession. Hochtief sued Argentina at ICSID for expropriation. In December 2014, following several years of legal battles on jurisdiction and merits, a prominent tribunal comprising Chris Thomas QC, Judge Charles Brower, and Professor Vaughan Lowe QC, issued its decision on liability (see Decision on Liability, ICSID Case No. ARB/07/31, December 29, 2014).</p>
<p>The Hochtief tribunal’s decision is informative in many respects, but its treatment of Argentina’s political risk insurance objections deserves particular attention. Prior to bidding for its concession, Hochtief took out a political risk insurance policy with the German Government under a German Government programme that provides Federal guarantees for direct investment in foreign countries. Having seen its project expropriated, Hochtief applied for compensation under the Guarantees, receiving over €11 million prior to suing Argentina at ICSID.</p>
<p>Argentina objected to the admissibility of Hochtief’s claims before ICSID on the basis that, because the German Government paid the compensation, Germany was subrogated to the rights of Hochtief under the BIT, so Hochtief could no longer pursue its claims. The Tribunal rejected Argentina’s admissibility objection, finding the BIT requires a transfer of rights to claim by provision of law or by a legal act, and that no such transfer happened when Hochtief purchased its political risk insurance.</p>
<p>The <em>Hochtief</em> tribunal further found that a political insurance payment is a benefit which an investor arranges on its own behalf, and for which it pays. Political risk insurance does not reduce the losses caused by a host State’s actions in breach of the underlying BIT. In essence, political risk insurance is an arrangement made with a third party in order to provide a hedge against potential losses. The <em>Hochtief</em> tribunal found that there was no principle of international law that would require such an arrangement to reduce the breaching host State’s liability.</p>
<p>The <em>Hochtief</em> liability decision is one of the rare investment decisions that address political risk insurance objections. However, political risk insurance is by no means a new concept in the world of investment law. Investment in volatile jurisdictions can involve setbacks that include bribery, corruption, or even the total collapse of local economies, wholesale rejection of contracts, political crises and coups and even claims relating to violations of human rights. Despite the ever-present security concerns in conflict-affected states, investors value business opportunities that promise generous returns on their investments, as long as the anticipated returns are high enough to outweigh the increased risks. Political risk insurance has developed alongside foreign direct investment as a way to hedge against a variety of such risks.</p>
<p>Hong Kong is a relatively new market for insurers offering political risk insurance policies. However, the local market is expected to grow, as Hong Kong solidifies its position as an important regional hub for China’s Belt &amp; Road Initiative, a reliable jurisdiction through which foreign investors can channel funds into other Asian jurisdictions that can at times be volatile.</p>
<p><strong>Institutional Insurance: MIGA</strong></p>
<p>The World Bank’s Multilateral Investment Guarantee Agency (“MIGA”) was one of the first international institutions to offer political risk insurance to investors venturing into conflict-affected or volatile jurisdictions. To benefit from MIGA’s insurance policies, a foreign investor must be a national of a MIGA member-State and must seek insurance for an investment into a developing country. In line with that policy statement, MIGA has developed five types of insurance products. MIGA insures investors against losses relating to currency inconvertibility and transfer restrictions, expropriation, war, terrorism and civil disturbance, breach of contract, and non-honouring of financial obligations.</p>
<p><strong><em>Currency Inconvertibility &amp; Transfer Restrictions</em></strong></p>
<p>In terms of currency inconvertibility and transfer restrictions, MIGA’s involvement is engaged if the host State imposes transfer restrictions such that the foreign investor is not in a position to convert local currency into hard currencies and transfer it to its country of origin. In those situations, MIGA would pay compensation in the hard currency specified in the contract of guarantee with the investor.</p>
<p>In this respect, most investment lawyers would argue that the majority of treaties contain provisions on transfer of investments and returns. The Hong Kong-Australia BIT, for example, provides in its Art. 8 that <em>“each Contracting Party shall in respect of investments guarantee to investors of the other Contracting Party the right to transfer abroad their investments and returns”.</em> Similar transfer provisions are included in virtually every existing BIT. These provisions often require that the investor be able to convert currency of the funds prior to transfer. The question begs what value MIGA’s policies add to investors if the relevant investment treaties already contain the required guarantees.</p>
<p>For a foreign investor to benefit from the treaty’s transfer provisions however, the investor needs to engage the treaty’s dispute resolution mechanism, go through years of arbitration and/or litigation, and obtain an award confirming (hopefully) that the host State is in breach of the treaty’s transfer provisions and that it owes compensation to the investor. This would be a brilliant outcome, but not the end of the story. The investor would then have to enforce the award against the host State.</p>
<p>MIGA does not require an award to find that the host State has effectively blocked repatriation of funds. MIGA will compensate the investor for the host State’s conduct without the trouble of having the insured investor go through arbitration and enforcement proceedings.</p>
<p><em><strong>Expropriation</strong></em></p>
<p>MIGA’s expropriation coverage is wide-ranging. It encompasses everything from nationalisation to <em>“creeping”</em> expropriation. Here again, MIGA does not require an award in the investor’s favour to pay compensation. If equity investment is expropriated, MIGA compensates the insured investor based on the net book value of the insured investment. When funds are expropriated, MIGA pays the insured portion of the blocked funds. For loans and loan guaranties, MIGA insures the outstanding principal and any accrued and unpaid interest. MIGA pays compensation upon assignment of the investor’s interest in the expropriated asset to MIGA.</p>
<p>For all practical means, from the investor’s perspective, getting compensation for expropriation from MIGA is faster and cheaper than investment arbitration. By resorting to MIGA, the foreign investor safeguards its relationship with the host State by avoiding fierce (and often very public) confrontation before an investment tribunal, amongst other benefits.</p>
<p><em><strong>War, Terrorism &amp; Civil Disturbance</strong></em></p>
<p>Under the umbrella of its policy for insuring risks against war, terrorism and civil disturbance, MIGA protects insured investors from destruction of tangible assets or from total business interruption caused by politically motivated acts of war or civil disturbance in a host State. For tangible asset losses, MIGA compensates the investor’s share of the lesser of the replacement cost and the cost of repair of the damaged or lost assets, or the book value of such assets if they are neither being replaced nor repaired. For total business interruption, MIGA’s compensation is based, in the case of equity investments, on the net book value of the insured investment or, in the case of loans, the insured portion of the principal and interest payment in default.</p>
<p>Again, the added value of MIGA’s war, terrorism and civil disturbance insurance is that the investor is not required to produce a treaty award in its favour to seek compensation.</p>
<p><em><strong>Non-Honouring of Financial Obligations</strong></em></p>
<p>MIGA’s insurance against non-honouring of financial obligations protects against losses resulting from a failure of a sovereign, sub-sovereign, or state-owned enterprise to make a payment when due under an unconditional financial payment obligation or guarantee related to an investment. This coverage is applicable in situations when a financial payment obligation is unconditional and not subject to defences. Compensation would be based on the insured outstanding principal and any accrued and unpaid interest. Here again, MIGA does not require an arbitral award to compensate the insured investor for his losses.</p>
<p><em><strong>Breach of Contract</strong></em></p>
<p>MIGA’s breach of contract insurance is the only insurance policy that requires the insured investor to engage a contractual dispute resolution mechanism as a pre-condition for compensation. MIGA would expect the investor to invoke the dispute resolution mechanism set out in the underlying contract. If, after a specified period of time, the investor is unable to obtain an award due to the government’s interference with the dispute resolution mechanism (denial of recourse), or has obtained an award but the investor has not received payment under the award (non-payment of an award), MIGA would pay compensation.</p>
<p><strong>Government-Backed &amp; Private Insurers</strong></p>
<p>In addition to MIGA insurance, which does have its own threshold and membership issues, it is open to foreign investors to purchase political risk insurance from other government-backed and private insurers.</p>
<p>SinoSure (a Chinese State-owned export and credit insurance corporation) has become particularly important in the context of Beijing’s Belt &amp; Road Initiative. SinoSure insures a large part of Chinese investment abroad. Its investment insurance policy is designed to underwrite investors’ economic losses caused by political risks in host States. By virtue of its role, SinoSure also takes the majority of losses when the insured investment goes sour.</p>
<p>A number of private insurers in the region have followed MIGA and SinoSure, and have developed their own sophisticated insurance policies. Zurich Insurance Group, AIG, AXA, Prudential, Allianz, and many other large multinational insurance companies offer more and more elaborate and comprehensive political risk insurance schemes.</p>
<p>Against this backdrop, it is particularly interesting to see whether AIIB, Asia’s major financing institution designed to encourage investment in Asia, will offer political risk insurance policies similar to the World Bank’s MIGA or akin to private insurers.</p>
<p><strong>Interplay of Political Risk Insurance &amp; Investment Arbitration</strong></p>
<p>Political risk insurance is a sophisticated tool to hedge risks of undue government interference with investments in fragile economies and developing states. It is costly, but it guarantees compensation in cases of expropriation, adverse regulation, political instability, or physical destruction of investments. A number of private insurers are adjusting their political risk insurance products to offer coverage of denial of justice and breach of investors’ legitimate expectations, as well.</p>
<p>Most political risk insurance products do not require the insured investor to obtain a treaty award to receive compensation. Public insurers, such as MIGA, have the additional leverage of resolving disputes with local governments before the disputing parties reach a point of no return and before a full treaty dispute crystallizes.</p>
<p>Investment treaty arbitration remains the most efficient tool to recover lost investments where political risk insurance is not available and where all other options fail. If <em>Hochtief v Argentina</em> is followed, treaty tribunals are unlikely to regard political risk insurance as an arrangement that affects the level of compensation or view political risk insurance as an obstacle to admissibility of an investor’s claims.</p>
<p>Political risk insurance and investment arbitration should be seen as complementary concepts that exist to increase investors’ confidence in exporting capital to developing markets. </p>
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/olga_boltenko_cms_colo_opt_0.jpeg" width="420" height="420" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/nanxi-ding"><h2>Nanxi Ding</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p>Researcher, CMS Hasche Sigle Hong Kong LLP</p>
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</div> Tue, 03 Oct 2017 08:01:19 +0000admin11997 at http://hk-lawyer.orghttp://hk-lawyer.org/content/political-risk-insurance-rise-along-belt-road-viable-alternative-investment-arbitration#comments"Mercantile Adventurers" Making Their Way to Hong Kong and Singapore: A Blessing or a Curse?http://hk-lawyer.org/content/mercantile-adventurers-making-their-way-hong-kong-and-singapore-blessing-or-curse
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/dispute-resolution" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Dispute Resolution</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">&quot;Mercantile Adventurers&quot; Making Their Way to Hong Kong and Singapore: A Blessing or a Curse?</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/35._tpf_arbitration.png"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/35._tpf_arbitration.png" width="542" height="428" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p>In recent years, international arbitration has emerged as a high-growth area for the litigation funding industry. All the major funders now have international arbitration cases in their portfolios, and many are aggressively seeking more – especially investment treaty cases.</p>
<p>Third-party funding (“TPF”) is an area of intense debate amongst practitioners of investor-State arbitration. Of all the cases that inform this debate, the best known is <em>RSM Production Corporation v Saint Lucia</em> (ICSID Case No. ARB/12/10) (“RSM”). In <em>RSM</em>, the claimant – described as a "serial" ICSID litigant – resisted a costs order made by the Tribunal. In his assenting opinion, one of the arbitrators (Dr. Gavan Griffith QC) explained that, as a general principle, States in investment arbitration should be regarded as accepting the risk that claimants may not be able to meet costs orders. This will often be due to the same reasons the claimant brings the arbitration against its host State (ie, the disputed measures have caused the claimant's sole business venture to stop generating revenue). In those cases, Dr. Griffith explained, the third-party funder is a self-appointed invitee who takes a significant financial benefit arising from claims made by the funded party against the State under the terms of an investment treaty, but hides behind the costs immunity that is ordinarily accorded to the claimant. In Dr. Griffith's view, the funder should not enjoy the same protection against security for cost orders that is accorded to the claimant itself. On this premise, claimants in investor-state arbitration might have to absorb cost orders if they are funded, and that might impact the way funders approach their funding arrangements with claimants in investor-state disputes.</p>
<p>Cases like <em>RSM</em> suggest that a specific body of TPF principles is beginning to emerge in ICSID arbitration. The ICSID system is self-contained, delocalised and not subject to the supervisory power of local courts, which means that, in structural terms, it is possible for ICSID practice to evolve independently in the area of TPF.</p>
<p>Outside the ICSID system, the participation of funders in arbitration raises a number of other issues, some national and legal, and others international and ethical. As the number of funded users of international arbitration increases, regulation of TPF is becoming an important factor in choosing the seat, and awareness of this is driving legislative change in this area.</p>
<p>The law of the seat usually serves two main functions: first, it provides basic rules for the conduct of the arbitration (most of which are subject to party autonomy); second, it governs the relationship between the arbitral tribunal and the local courts (including judicial review and enforcement of the award).</p>
<p>But there is more to the lex arbitri than the arbitration act. The law of the seat also supplies mandatory rules that, whilst not specific to arbitration, may still be applicable to the arbitral process and its participants. TPF laws are an example. If a funded party goes to arbitration at a seat where TPF is illegal then that party faces five main risks:</p>
<ul><li>If the funded party is the claimant (as is usually the case), the respondent may seek to injunct the arbitration on the basis that it is an abuse of process; alternatively, the respondent may sue the funded claimant in tort (for abuse of process or champerty and maintenance – discussed below);</li>
<li>If the funded party needs the assistance of the courts of the seat, the courts may decline to assist on the basis that the funded party lacks clean hands (because it is funded);</li>
<li>If the funded party prevails in the arbitration, the respondent may seek to set-aside the award on the basis that, as the product of a funded arbitration, the award is offensive to public policy. Further, the funded party’s lawyers may be at risk to the extent that they are subject to the professional conduct rules or legal practice regulations of the seat.</li>
<li>Finally, for the funder, there is a risk that, if the funded party’s assets are located in a TPF-intolerant jurisdiction, the funder may not be able to enforce its rights under the funding agreement.</li>
</ul><p>Experienced arbitration lawyers are aware of these risks: if they have a client that will or may need TPF, they will advise that client to choose another seat. Sophisticated legislators are aware of this and the potential it has to reduce their share of the global market for arbitration services. This is why many of the leading seats are now changing their laws to make them more TPF-tolerant. Singapore is the latest example.</p>
<p><strong>Singapore's Evolving Stance towards TPF Agreements</strong></p>
<p>Singapore prides itself on having the “Rolls Royce” of international arbitration frameworks. However, Singapore law currently prohibits TPF in both litigation and arbitration (albeit with limited exceptions):</p>
<ul><li>First, Singapore law generally treats third-party funding agreements as contrary to public policy or illegal. This policy is informed by the common law doctrines of maintenance and champerty (maintenance is the giving of assistance or encouragement to a litigant by a person who has neither an interest in the proceedings nor any other motive recognised by law as justifying interference; champerty is the maintenance of an action in exchange for share in the fruits of the proceedings).</li>
<li>Second, Singapore law regards maintenance and champerty as torts at common law. An affected party could (at least in theory) sue the funded party (or parties) in tort if the affected party has suffered special damage as a result of the relevant tortious arrangement. The Singapore Court of Appeal has stated that the principles behind the doctrine of champerty apply to all types of legal disputes and claims, including arbitration proceedings (<em>Otech Pakistan Pvt Ltd v Clough Engineering Ltd &amp; Anor</em> [2007] 1 SLR(R) 989).</li>
</ul><p>There are, however, certain statutory and common law exceptions to the doctrines of maintenance and champerty in Singapore. For example, the liquidator of an insolvent company is allowed to sell – to a funder or other party – a cause in action and/or the fruits of a cause of action (Companies Act (Cap. 50), s 272(2)(c); <em>Re Vanguard Energy Pte Ltd</em> [2015] 4 SLR 597).</p>
<p>More generally, a third-party funding arrangement will not be struck down in Singapore if:</p>
<ul><li>it is incidental to the transfer of a property right or interest;</li>
<li>the funder has a legitimate interest in the outcome of proceedings (for example, where the funder is a beneficiary, shareholder, director, or creditor of the funded party); or</li>
<li>there is no realistic possibility that the administration of justice will suffer as a result, taking into account the protection of the purity/due administration of justice (for example, the extent to which the funded litigant retains control over legal proceedings or has ceded such control to the funder) and the interests of vulnerable litigants, and ensuring access to justice (<em>Re Vanguard Energy Pte Ltd</em> [2015] 4 SLR 597, [43]; <em>Lim Lie Hoa &amp; Anor v Ong Rebecca Jane</em> [1997] 1 SLR(R) 775, [46]).</li>
</ul><p>On 30 June 2016, the Singapore Ministry of Law (“MinLaw”) launched a public consultation on its proposals for enactment of a legislative framework for TPF. The proposed new legislation will clarify that the common law torts of maintenance and champerty are abolished, and provide that TPF contracts are not contrary to public policy or illegal in international arbitration and related proceedings.</p>
<p>Singapore's MinLaw has also proposed a number of TPF-related safeguards. For instance, MinLaw has proposed that third-party funders only be able to enforce their rights if they satisfy a number of conditions. These include a requirement that the funder has access to funds immediately under its control sufficient to fund the relevant proceedings in Singapore. It is also proposed that lawyers will be bound to disclose the existence of a TPF agreement and the identity of the funder to a court or arbitral tribunal and every other party to the proceedings. The proposed legislation also envisages guidelines (based principally on the IBA Guidelines on Conflicts of Interest in International Arbitration) being issued in due course.</p>
<p>If enacted, the new legislation will reduce (even eliminate) the risk that a TPF arrangement is used as a basis for judicial intervention in the arbitration or as a premise for an application to set-aside the award (or refuse its enforcement). This will make Singapore more attractive as a seat.</p>
<p>While TPF is often associated with smaller businesses, larger businesses increasingly use TPF products as cost/risk shifting tools. So, while the short-term market impact of these changes may be more pronounced at the “smaller end of town”, in the long term it is likely that the new TPF rules will also increase Singapore’s capture of cases involving larger businesses too. Finally, the changes will mean that Singapore lawyers are able to act for funded parties in international arbitration proceedings.</p>
<p><strong>Hong Kong Leading the Way in Introducing TPF Legislation </strong></p>
<p>Years ago Hong Kong acknowledged that allowing TPF for international arbitration proceedings seated in Hong Kong will increase Hong Kong's competitiveness as an arbitral seat.</p>
<p>In 1995, Kaplan J found, in <em>Cannonway Consultants Ltd v Kenworth Engineering Ltd</em> [1995] 1 HKC 179, that it would be inappropriate to extend the doctrine of champerty to international arbitration proceedings in Hong Kong:</p>
<p style="margin-left:28.35pt;">"<em>In the light of the history of champerty, it was not appropriate to extend the doctrine from public justice to a private consensual system, that is, arbitration, especially when faced with the diminution of the role of the court in relation to arbitration and the introduction of the UNCITRAL Model Law which gave supremacy to the doctrine of full party autonomy. Parties chose arbitration to keep out of the public justice system save when some support for the arbitration process was required from the courts. Therefore, the doctrine of champerty did not apply to arbitration proceedings and was confined to agreements about the conduct of litigation. </em></p>
<p style="margin-left:28.35pt;"><em>Moreover, in Hong Kong, many arbitrations had an international dimension and to subject international parties to a rule of law which was not applicable in many other jurisdictions would be to make Hong Kong a less desirable venue for international arbitration</em>."</p>
<p>In October 2015, Hong Kong conducted a legislative consultation process regarding TPF, following which the Hong Kong Law Reform Commission's Sub-committee on Third Party Funding for Arbitration (“Sub-committee”) issued its draft TPF guidelines.</p>
<p>The Sub-committee recognised that in order for Hong Kong to maintain its competitive position as an international arbitration centre, it is necessary to make it clear that TPF for arbitrations taking place in Hong Kong is permitted under Hong Kong law. Whilst refraining from expressing a fixed set of views on the approach to the adopted, the Sub-committee acknowledged the need for clear ethical and financial standards to be articulated in, <em>inter alia</em>, the following areas:</p>
<ul><li>capital adequacy requirements for third party funders;</li>
<li>whether there should be mandatory disclosure of third party funding in an arbitration; and</li>
<li>management of conflicts of interest. For example, the Sub-committee looked into whether an arbitrator's impartiality will be called into question in cases of multiple appointments by different parties but backed by the same funder.</li>
</ul><p>The approach that will be taken by the Hong Kong legislature is unlikely to differ too significantly from that taken by the Singapore legislature.</p>
<p><strong>Moving Forward</strong></p>
<p>In Hong Kong and Singapore, TPF has traditionally been viewed as a speculative business venture that would sully the "purity of justice" by incentivising the champertous maintainer to "inflame damages, to suppress evidence, or even to suborn witnesses" (see <em>Re Trepca Mines Ltd (No 2) </em>[1963] Ch 199 at 219-220 per Lord Denning). Drawing on such dicta, critics of TPF have attacked litigation funding for fear it will lead to "trafficking in litigation" and the wastage of public resources on unmeritorious claims. But, as the discussion above shows, international arbitration practice has already evolved to ensure that adequate checks and balances are in place to address these concerns. Further, those who criticise TPF often fail to acknowledge the way funders work: if a claim is truly without merit, it will not get funding. Funders do not just bet on any horse that rides past. Sophisticated funders have boards of expert advisers (often experienced international arbitration lawyers) who are tasked with analysing each claim before any decision is made to commit funds to support its prosecution. So, in systemic terms, funders can and do play a filtering role, eliminating frivolous claims before they become burdensome legal actions. In the context of international arbitration, as Kaplan J sitting in Hong Kong found over a decade ago in <em>Cannonway</em>, it would be fundamentally unfair to subject international disputing parties to the TPF-intolerant legislation that has become obsolete both conceptually and in practice. For Hong Kong and Singapore, TPF is an important policy area. Both jurisdictions have now come to understand that, regulated in the right way, TPF will not lead to a flurry of frivolous claims. Rather, TPF has the potential to deliver access to justice for parties who would otherwise be priced out of the court. More broadly, it is also clear that, if a jurisdiction does not have TPF-tolerant laws, it risks losing market share to jurisdictions that do. Inter-seat competition is, therefore, undeniably driving legislative change in this area. </p>
</div></div></div><div class="field field-name-field-jurisdictions field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Jurisdictions:&nbsp;</div><div class="field-items"><div class="field-item"><a href="/jurisdictions/hong-kong" typeof="skos:Concept" property="rdfs:label skos:prefLabel">Hong Kong</a></div><div class="field-item"><a href="/jurisdictions/asia" typeof="skos:Concept" property="rdfs:label skos:prefLabel">Asia</a></div></div></div><div class="view view-authors-of-article view-id-authors_of_article view-display-id-entity_view_1 view-dom-id-ea748819fadb882b45120d1b69594ab2">
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/00._sam_luttrell.jpg" width="205" height="179" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/sam-luttrell"><h2>Sam Luttrell</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p>Clifford Chance, Counsel</p>
<p>Dr. Luttrell is a counsel with the international arbitration practice of Clifford Chance in Perth. He is a prolific writer in the areas of trade and investment law. His practice covers both international commercial arbitration and investor-State arbitration. In 2016, Dr. Luttrell was named in <em>Australia’s Best Lawyers </em>for international arbitration. Noted for his "<em>very good advocacy skills</em>" (<em>Global Arbitration Review</em>), he is recognised as a "<em>rising star</em>" of dispute resolution in Australia (<em>Doyle's Guide</em>) and a "<em>key contact</em>" with "<em>experience in sovereign State arbitrations across the Asia Pacific region</em>" (<em>Legal 500</em>). </p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/yvette-anthony"><h2>Yvette Anthony</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p>Clifford Chance, Senior Associate</p>
<p>Ms. Anthony is a senior associate in our Litigation and Dispute Resolution practice in Singapore. She has previously assisted a prominent Senior Counsel in a Singapore firm on premier commercial disputes. She also has relevant experience in investment treaty disputes. </p>
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/olga_boltenko_cms_colo_opt_0.jpeg" width="420" height="420" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Fri, 02 Sep 2016 09:32:20 +0000admin10373 at http://hk-lawyer.orghttp://hk-lawyer.org/content/mercantile-adventurers-making-their-way-hong-kong-and-singapore-blessing-or-curse#commentsTPP Absentees: Russia and Chinahttp://hk-lawyer.org/content/tpp-absentees-russia-and-china
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/contents/exclusively-online" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Exclusively Online</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">TPP Absentees: Russia and China</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/00._tpp.jpg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/00._tpp.jpg" width="1200" height="738" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p>On 4 October 2015, it was announced that negotiations for Trans-Pacific Partnership Agreement (“TPP”) have been concluded. The TPP is now in a ratification pattern, the outcome of which is by no means certain (especially given several key members have election cycles at advanced stages of maturity). If the TPP does come into force, it will be the largest Free Trade Agreement (“FTA”) in the Asia-Pacific, covering 40 percent of global trade.</p>
<p>To date, most of the commentary on the TPP has focused on the substance of the treaty, particularly its investment chapter and the Investor-State Dispute Settlement (“ISDS”) provisions contained within it. Less has been said about what – or more importantly <em>who</em> – is missing from the TPP: Russia and China.</p>
<p>There appears to have been some divergence amongst the TPP parties on the wisdom of excluding these powers, especially China. As Japanese Prime Minister Shinzo Abe said recently, the TPP would have more “significant strategic meaning if China joined”<em>. </em></p>
<p>Russian President Vladimir Putin has made his views clear:</p>
<p style="margin-left:35.45pt;">“[T]he absence of two major regional players such as Russia and China in the TPP composition will not promote the establishment of effective trade and economic cooperation. The multilateral system of economic relations in the Asia Pacific Region can only be strong if the interests of all states across the region are taken into account. This approach is reflected in the draft of the Beijing road map for the establishment of an Asia-Pacific free trade area.”</p>
<p>Having been excluded from the TPP, Russia and China now appear to be accelerating their negotiations with other Asia-Pacific nations. For example, at the APEC Summit in Beijing, Russia and China discussed the integration into the Asia-Pacific region of Siberia and the Russian Far East, with its vast natural resources and infrastructure investment opportunities. One of the focuses of the Summit was the establishment of a Free Trade Area of the Asia Pacific (“FTAAP”), which is intended to unite all 21 APEC member economies, including China and Russia. He Weiwen, a former Chinese Commerce Ministry official, said that the potential of the FTAAP could be up to three times greater than that of the TPP.</p>
<p>The TTP may incentivise China to conclude talks on its own Regional Comprehensive Economic Partnership (“RCEP”), which would link the ten ASEAN nations with Australia, China, India, Japan, New Zealand and South Korea – countries that between them make up 30 percent of global GDP.</p>
<p>While these developments do give some credence to predictions that the TPP would act as a catalyst for trade and investment liberalisation and cooperation in the Asia-Pacific, they also raise the difficult question of how these blocs will interact (if and when they are formed). This question is made more complicated by the diverse diplomatic and security situations of the countries concerned.</p>
<p>Based on the final text of the TPP, the negotiating parties appear to have paid significant attention to the prospect of non-parties accessing the new bloc. <a href="https://www.mfat.govt.nz/assets/_securedfiles/Trans-Pacific-Partnership/Text/9.-Investment-Chapter.pdf">Article 9.15(2)</a> of the Investment Chapter of the TPP contains a carefully crafted Denial of Benefits clause that provides as follows:</p>
<p style="margin-left:35.45pt;">"A Party may deny the benefits of this Chapter to an investor of another Party that is an enterprise of that other Party and to investments of that investor if persons of a non-Party own or control the enterprise and the denying Party adopts or maintains measures with respect to the non-Party or a person of the non-Party that prohibit transactions with the enterprise or that would be violated or circumvented if the benefits of this Chapter were accorded to the enterprise or to its investments."</p>
<p>This is not the typical "<em>anti-mailbox</em>" Denial of Benefits (“DoB”) clause found in many multilateral treaties. In its reference to "measures [...] that prohibit transactions", the TPP DoB clause clearly contemplates members using their sanctions programmes to exclude certain investors and investments from the protections of the treaty. This, it should be noted, is not a novel objective. Certain United States BITs from the early 1990s contain DoB clauses that permit the denial of advantages to both free-riders and companies "controlled by nationals of a third country with which the denying Party does not maintain normal economic relations", the latter covering situations in which sanctions have been imposed.</p>
<p>Out of the TPP's 12 member-states, five maintain sanctions regimes against Russia: the US, Canada, Australia, New Zealand, and Japan. It is quite possible that the United States' TPP negotiators, and perhaps delegates from these other countries, had Russia in mind when the TPP DoB clause was drafted.</p>
<p>Understandably, the sanctions-related DoB provision of the TPP has caused Russia concern. In a recent interview, President Putin said that:</p>
<p style="margin-left:35.45pt;">“Russia believes that free trade agreements should not fragment the multilateral trading system, but rather complement them, contribute to its consolidation and the growth of interconnectedness. The regional unions should not be turned against each other or otherwise divided.”</p>
<p>Russia maintains significant presence in what is to become the TPP area. Indeed, the TPP group includes countries with which Russia has long-standing political and economic relations. The obvious example is Vietnam, where Russian State-Owned Enterprises are active in a number of sectors (including oil and gas). A lesser known example is Singapore – an increasingly important routing point for Russian capital in the region.</p>
<p>Assuming the sanctions-related DoB clause in the TPP forms part of the final accord, Russian-controlled companies and their investments will be exposed to denials of protection under the TPP. They will likely rely on other instruments, such as older BITs and other regional FTAs – at least while they wait for the FTAAP.</p>
<p>There does, therefore, now seem to be a risk that the principal virtue of multilateral trade and investment treaties – the harmonisation of rules-based trade and investment – will be lost in a web of competing instruments in the Asia-Pacific. Of course, the risk of "fragmentation" will be reduced if the TPP's accession rules would allow Russia and China to join, but this is not to be taken for granted given the obligations that the TPP imposes on its member-states with respect to their State-Owned Enterprises. In the end, the FTAAP and the RCEP may be more significant than the TPP. </p>
</div></div></div><div class="field field-name-field-jurisdictions field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Jurisdictions:&nbsp;</div><div class="field-items"><div class="field-item"><a href="/jurisdictions/international" typeof="skos:Concept" property="rdfs:label skos:prefLabel">International</a></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-inline clearfix"><div class="field-label">Tags:&nbsp;</div><div class="field-items"><div class="field-item" rel="dc:subject"><a href="/tags/tpp" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">TPP</a></div><div class="field-item" rel="dc:subject"><a href="/tags/china" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">China</a></div><div class="field-item" rel="dc:subject"><a href="/tags/russia" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Russia</a></div></div></div><div class="view view-authors-of-article view-id-authors_of_article view-display-id-entity_view_1 view-dom-id-35efe705a5925cf4eaea37c66dc86bae">
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<div class="views-field views-field-field-image"> <div class="field-content"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/00._sam_luttrell.jpg" width="205" height="179" alt="" /></div> </div>
<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/sam-luttrell"><h2>Sam Luttrell</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p>Clifford Chance, Counsel</p>
<p>Dr. Luttrell is a counsel with the international arbitration practice of Clifford Chance in Perth. He is a prolific writer in the areas of trade and investment law. His practice covers both international commercial arbitration and investor-State arbitration. In 2016, Dr. Luttrell was named in <em>Australia’s Best Lawyers </em>for international arbitration. Noted for his "<em>very good advocacy skills</em>" (<em>Global Arbitration Review</em>), he is recognised as a "<em>rising star</em>" of dispute resolution in Australia (<em>Doyle's Guide</em>) and a "<em>key contact</em>" with "<em>experience in sovereign State arbitrations across the Asia Pacific region</em>" (<em>Legal 500</em>). </p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Tue, 17 May 2016 08:50:34 +0000admin9894 at http://hk-lawyer.orghttp://hk-lawyer.org/content/tpp-absentees-russia-and-china#commentsArbitrating Disputes Arising out of Artist Agreements: Powerful Lessons from Hong Kong and Singaporehttp://hk-lawyer.org/content/arbitrating-disputes-arising-out-artist-agreements-powerful-lessons-hong-kong-and-singapore
<div class="field field-name-field-contents field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item" style=color:#144981;><a href="/contents/features" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Features</a></div></div></div><div class="field field-name-field-practice-areas field-type-taxonomy-term-reference field-label-hidden"><div class="field-items"><div class="field-item"><a href="/practice-areas/dispute-resolution" typeof="skos:Concept" property="rdfs:label skos:prefLabel" datatype="">Dispute Resolution</a></div></div></div><div class="field field-name-title-field field-type-text field-label-hidden"><div class="field-items"><div class="field-item">Arbitrating Disputes Arising out of Artist Agreements: Powerful Lessons from Hong Kong and Singapore</div></div></div><div class="field field-name-field-image field-type-image field-label-hidden"><div class="field-items"><div class="field-item" rel="og:image rdfs:seeAlso" resource="http://hk-lawyer.org/sites/default/files/field/image/istock_000033386492xla_opt.jpeg"><img typeof="foaf:Image" src="http://hk-lawyer.org/sites/default/files/field/image/istock_000033386492xla_opt.jpeg" width="1772" height="1181" alt="" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item" property="content:encoded"><p><em>“This is a court of law, young man, not a court of justice.” Oliver Wendell Holmes, Jr.</em></p>
<p>The number of disputes in music and entertainment arising from agreements between musicians and their managers is on the rise. Some feuds arise from disputes over royalties, or over the artists’ intellectual property rights, or because artists wish to opt out of unfavourable contracts. With the copious publicity that usually surrounds these disputes, there is no lack of examples. The latest dispute of this nature broke out between Kesha and Dr. Luke, with Kesha seeking to invalidate the recording agreements that she signed with Dr. Luke and his recording company, making international headlines.</p>
<p>A vast majority of these disputes are resolved in the courts, and this is where two diametrically opposed worlds collide – the world of law and the world of music. Often the outcome of this collision is a fair result if one follows the dry dictum of law, but it is fundamentally unjust when one has regard to the fleeting nature of creativity and the fragile artistic freedom. Harsh lessons learned from one of Hong Kong’s most well-cited music judgments stand as a powerful call to resolve music and entertainment disputes through arbitration rather than in the courts.</p>
<p><em><strong>Hummingbird</strong></em></p>
<p>In <em>Hummingbird Music Limited v Dino Acconci and Giulio Acconci </em>(<a href="http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=64068&amp;QS=%2B&amp;TP=JU" target="_blank">HKCACV No. 40/2009</a> of 5 January 2010 on appeal from HCA No. 836/2007 of 22 January 2009), the Court had to consider a set of talent management agreements between Hummingbird, a talent agency backed by a well-off Macanese merchant family, and Dino and Giulio Acconci, a Hong Kong rock duo performing under the name Soler.</p>
<p>Soler claimed, before the Court of First Instance and further in the Court of Appeal, that Hummingbird failed to account for the artists’ earnings and treated them in a demeaning and humiliating manner, and that this in turn led to an irreversible breakdown of the parties’ relationship, and eventually to Soler<em>’s</em> termination of the management agreements. Hummingbird contested the termination before the Court of First Instance and sought specific performance, a declaration that the agreements were binding and enforceable, as well as damages for breach of contracts and various injunctions. In response, Soler sought injunctions, damages for breach of Hummingbird’s fiduciary duties and, in the alternative, a declaration that the parties’ agreements were void and unenforceable because they were in restraint of trade.</p>
<p>The Court of First Instance dismissed both parties’ applications for specific performance, holding that there can be no specific performance where the mutual trust between the parties is irreversibly broken, because by their very nature, talent management agreements require mutual trust. The Court of Appeal also dismissed Soler<em>’s</em> defences and counterclaims, in particular Soler’s claim that their talent management agreements were in restraint of trade, and awarded damages in the amount of more than HK$5 million in favour of Hummingbird. It was affirmed on appeal that a contract is not in restraint of trade simply because it ties the parties during the continuance of the contract, and that there is no restraint of trade where the negative ties are only those “which are incidental and normal to the positive commercial arrangements at which the contract aims.”</p>
<p>The <a href="http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=64068&amp;QS=%2B&amp;TP=JU"><em>Hummingbird</em></a> judgment, well-reasoned as it is, led to Soler<em>’s</em> bankruptcy and much coverage in Asian and international press, while Hummingbird has remained essentially a local recording studio often treated with suspicion over their dispute with Soler. Was this a fair and intended outcome of the <a href="http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=64068&amp;QS=%2B&amp;TP=JU"><em>Hummingbird</em></a> dispute? Would the outcome have been different if the parties had submitted their dispute to a panel of arbitrators with specific expertise in the music industry, of which at least one arbitrator would be a musician?</p>
<p>It is undisputed that arbitration offers numerous advantages, in particular in such a sensitive industry as entertainment and media. It is often private, as opposed to domestic litigation, as well as confidential and flexible. These latter advantages are essential, as one’s continued success in the music and entertainment industry often depends on one’s reputation and trustworthiness. Had Soler ventilated its dispute with Hummingbird in a confidential arbitration forum, it would not have had to face a plethora of demeaning mass media publications regarding their dispute and the ensuing bankruptcy. Hummingbird, on the other hand, may have risen to a new level of attracting and promoting international talent had their reputation not been tainted by allegations of unfair treatment of their artists. Importantly, if <span style="line-height: 20.8px;">Hummingbird </span>and Acconci each could have appointed arbitrators of their choice to decide the dispute, the tribunal with specific expertise in the music industry might have interpreted Soler’s relationship with <span style="line-height: 20.8px;">Hummingbird</span> differently and as a consequence, might have treated the parties “restraint of trade” arguments differently.</p>
<p><em><strong>Chua Chian Ya</strong></em></p>
<p>Singapore courts entertained a similar dispute shortly after the Hong Kong Court of Appeal dismissed the Soler application. In a well-cited judgment in <em>Chua Chian Ya v Music &amp; Movements (S) Pte</em> (<a href="http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/court-of-appeal-judgments/13911-chua-chian-ya-v-music-amp-movements-s-pte-ltd-formerly-trading-as-m-amp-m-music-publishing-2009-sgca-54" target="_blank">SGCA 167/2008</a> dated 6 November 2009), the disputing parties – a known Singaporean singer Tanya Chua and her record label studio – asked the Singapore Court to determine the extent of the studio’s accounting obligations towards Ms. Chua, as well as to decide whether Ms. Chua’s agreements with her recording studio were in restraint of trade. With reference to the <a href="http://legalref.judiciary.gov.hk/lrs/common/search/search_result_detail_frame.jsp?DIS=64068&amp;QS=%2B&amp;TP=JU"><em>Hummingbird</em></a> judgment, the Singapore Court dismissed Ms. Chua’s arguments that the management agreements were in restraint of trade, on the same basis, but upheld Ms. Chua’s claims for proper accounting for her earnings.</p>
<p>Here, again, arbitration would have provided a confidential forum for Ms.Chua to resolve her disputes with Music &amp; Movements, and neither Ms. Chua nor the record label would have had to face the publicity that surrounded the court proceedings. And again, a tribunal with expertise in the music industry might have come to a different conclusion with respect to Ms. Chua’s arguments that her contractual arrangements with Music &amp; Movements were in restraint of trade.</p>
<p><strong>Industry Trends</strong></p>
<p>Recognising the advantages of arbitration, recording studios and artists opt for arbitration clauses in their contractual arrangements. One of the most prominent examples involves the Rolling Stones and their dispute with Detto, as reported by Pierre Tercier in his <em>Performance as a Remedy: Non-Monetary Relief in International Arbitration</em> (ASA Special Series No. 38).</p>
<p>This penchant for arbitration in the music industry has led to a number of arbitration practitioners working exclusively in entertainment and music disputes. Arbitrating entertainment and music disputes has become a well-established practice in the US, where several specialised arbitral institutions have been founded to facilitate the resolution of music disputes through arbitration. For example, the <em>JAMS Entertainment and Sports Group</em> features a panel of arbitrators who work exclusively in music and entertainment dispute resolution. The <em>Independent Film and Television Alliance Arbitration Group </em>has a similar panel comprised of over 90 industry-experienced arbitrators. The <em>IFTA Group</em> has administered over 2,500 entertainment arbitrations involving nearly US$800 million in claims. The <em>World Intellectual Property Organisation</em> also assists music professionals, in particular in identifying their income streams based on their intellectual property rights.</p>
<p><strong>Looking Ahead</strong></p>
<p>As N. Weaver has observed, <em>“</em>[t]he entertainment industry is full of unconventional people and unconventional deals. Therefore, traditional courtroom legal resolutions do not necessarily create solutions that are workable.” There is no question that arbitration, mediation, and other forms of alternative dispute resolution would help preserve relationships in the entertainment industry where litigation might destroy them.</p>
<p>With its recently launched IP Arbitrator Panel, the HKIAC is leading the way in resolving music and entertainment disputes in Asia, and in particular those relating to intellectual property rights. The panel consists of 30 arbitrators and it is separate from HKIAC’s regular panel and list of arbitrators. These experts are open to accept appointments in a broad range of intellectual property matters, including licensing, copyright infringements, registration of trademarks and designs. The HKIAC’s initiative coincides with the Hong Kong Government’s proposed amendments to the Hong Kong Arbitration Ordinance, clarifying that intellectual property disputes are arbitrable in Hong Kong.</p>
<p>The SIAC is reported to have accepted into its panel a number of arbitrators with extensive expertise in resolving music and entertainment disputes.</p>
<p>With Hong Kong and Singapore fostering creativity and musical talent, artist-label disputes will be a more frequent occurrence in the years to come. While it is likely that these disputes will be increasingly resolved through arbitration rather than litigation, we must wait to see how Hong Kong and Singapore will accommodate this emerging area of arbitration practice.</p>
<hr /><p>The views expressed herein are the author’s and do not necessarily reflect those of Clifford Chance or its clients.</p>
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<div class="views-field views-field-name"> <span class="field-content"><a href="/authors/olga-boltenko"><h2>Olga Boltenko</h2></a></span> </div>
<div class="views-field views-field-description"> <div class="field-content"><p><strong>Fangda Partners, Hong Kong</strong></p>
<p>Ms. Boltenko is a registered foreign lawyer with Fangda Partners in Hong Kong. She specialises in investment arbitration. She has acted as legal counsel in investor-state disputes under the auspices of the Permanent Court of Arbitration, and as tribunal secretary in dozens of commercial disputes, both <em>ad hoc</em> and institutional (including SIAC, ICC, HKIAC, SCC), in a wide array of industries including oil and gas, infrastructure, construction, telecommunications and pharmaceuticals. She is an adjunct lecturer at the University of Hong Kong. She chairs the ICC Hong Kong Commercial Law and Practice Committee. She is listed as arbitrator on the HKIAC list of arbitrators, and on the AIAC, SIAC, and CIETAC panels of arbitrators.</p>
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</div> Wed, 04 May 2016 03:15:43 +0000admin9828 at http://hk-lawyer.orghttp://hk-lawyer.org/content/arbitrating-disputes-arising-out-artist-agreements-powerful-lessons-hong-kong-and-singapore#comments